The PBOC will add an overnight reverse repo operation at end-June. Huaxi Securities says this should push the overnight rate center toward about 1.30%-1.40% in the short term, guiding market money rates lower. Longer term, whether China’s policy-rate system becomes overnight-rate–centric depends on the operation’s structure: if the PBOC increases frequency and size, short-end market rates could reprice to the overnight policy rate and the framework could shift toward a Fed-style, overnight-rate–

The PBOC will add an overnight reverse repo operation at end-June. Huaxi Securities says this should push the overnight rate center toward about 1.30%-1.40% in the short term, guiding market money rates lower. Longer term, whether China’s policy-rate system becomes overnight-rate–centric depends on the operation’s structure: if the PBOC increases frequency and size, short-end market rates could reprice to the overnight policy rate and the framework could shift toward a Fed-style, overnight-rate–led regime; if overnight repos are used only episodically, the existing 7-day reverse repo–centered system would likely persist and overnight repos would merely stabilize the short-end rate center.