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on september 23, in order to maintain a reasonable level of liquidity in the banking system at the end of the quarter, the people's bank of china (hereinafter referred to as the "pboc") conducted a 7-day reverse repurchase operation of 160.1 billion yuan and a 14-day reverse repurchase operation of 74.5 billion yuan using a fixed interest rate and quantity bidding method.the open market 7-day reverse repurchase operation rate announced on the same day was 1.7%, the same as the previous period. the open market 14-day reverse repurchase operation rate was 1.85%, down 10 basis points from 1.95% in the previous period.

the central bank made it clear in its announcement thatthe interest rate for 14-day open market reverse repurchase operations is the interest rate for 7-day open market reverse repurchase operations plus 15 basis points.

the central bank's restart of the 14-day reverse repurchase and reduction of 10 basis points not only provides cross-season funds for the banking system and meets the market's reasonable liquidity needs, but also clarifies the pricing of the open market 14-day reverse repurchase operation rate, and once again makes it clear that the open market 7-day reverse repurchase operation rate is the main policy rate.

according to the shanghai securities news, industry insiders said that the current 14-day reverse repo rate cut is a compensatory cut for the previous 7-day reverse repo rate cut in july. the central bank announced on july 22 that starting from now, the 7-day reverse repo operation in the open market will adopt a fixed interest rate and quantity bidding, and the operating interest rate will be adjusted from 1.8% to 1.7%.

lou feipeng, a researcher at the postal savings bank of china, believes that the central bank simultaneously carried out 7-day and 14-day reverse repurchase operations, and for the first time clarified the interest rate of the 14-day reverse repurchase operation, which was 10 basis points lower than before, and also adopted a fixed interest rate and quantity bidding method. "from previous years, 14-day reverse repurchase operations were often carried out before the national day, which not only helped to maintain a reasonable level of liquidity in the banking system at the end of the quarter, but also helped to maintain a reasonable level of liquidity during the national day. at the same time, the precise release of liquidity can be achieved through the method of quantity bidding, which improves the accuracy of monetary policy regulation."

pang ming, chief economist of jll greater china, also believes that today's operation method further strengthened the market anchor role of the 7-day reverse repurchase operation rate. at the same time, by clearly indicating the operation range, it pointed out the policy direction for the 14-day interest rate, guided market expectations, and smoothed interest rate fluctuations in terms of price. it is also conducive to better achieving practical and detailed liquidity regulation, orderly expansion and contraction of capital operations, and appropriate tightness of liquidity in terms of quantity.

looking ahead to the end-of-quarter funding situation, industry insiders expect a cut in the reserve requirement ratio. qin han, chief fixed income analyst at zheshang securities, believes that due to the relatively high amount of government bond payments and reverse repurchase maturing in the next week, the corresponding funding will become more dependent on the central bank. in terms of seasonality, there is also a risk of rising interest rates and stratification near the cross-season funding period.

"if the reserve requirement ratio is lowered or a large number of mlf operations are carried out, it will be beneficial for large banks to replenish their medium- and long-term funds, or provide certain support for their lending capacity, and will be relatively beneficial to the funding side," said qin han.

daily economic newspeople's bank of china,shanghai securities news

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