At the Lujiazui Forum on June 17, PBOC governor Pan Gongsheng said the central
bank will narrow the temporary overnight repo rate corridor from 70bps to a
symmetric 50bps and will add overnight reverse-repo instruments as needed. Pan
said the PBOC will move the timing of temporary repo operations earlier and
disclosed trigger conditions: DR001 persistently below or above the
corresponding temporary repo operation rate would activate the tool to better
anchor market expectations. The measures are presented as accelerating the shift
to a price-based monetary framework to strengthen transmission from policy rates
to market rates. DR001 has traded about ±20bps around policy rates this year;
the PBOC said specific overnight reverse-repo operational details will be set by
market demand and implemented progressively.
