China News Service, Beijing, October 20 (Tao Siyue) The anchor point of China's main policy interest rate may move from 7 days to overnight.
Pan Gongsheng, governor of the People's Bank of China, said at the 2026 Financial Street Forum Annual Meeting on the 19th that he would consider opportunities to switch the duration of the central bank's main open market operations to overnight, and the open market overnight repurchase rate will accordingly become the main policy interest rate.
Pan Gongsheng pointed out that the inter-bank overnight repurchase rate, as the most benchmark interest rate with active transactions in the money market, can sensitively reflect the supply and demand of short-term funds. It has become more stable in recent years and has actually become the target interest rate for the central bank's monetary policy regulation. But at the same time, the main products of the central bank's open market operations and the main policy interest rate are still seven days, and the two are not completely consistent.
In 2024, the 7-day reverse repurchase operation interest rate will be clarified as the main policy interest rate, which will be determined by the central bank based on the needs of monetary policy regulation, in order to promote the transformation of the monetary policy framework into price-based regulation. At the same time, the policy color of interest rates on other term instruments has gradually faded. In March 2025, the Medium-term Lending Facility (MLF) was adjusted from a single-price winning bid to a multiple-price winning bid, completely withdrawing from the policy interest rate function and returning to its basic positioning as a medium-term liquidity injection tool.
The central bank also established temporary forward and reverse repurchase operations to stabilize overnight market interest rate fluctuations. In June 2026, overnight reverse repurchase operations were added, gradually increasing the frequency and volume of operations to further meet the market's differentiated liquidity needs.
Zhong Linnan, a senior macro analyst at GF Securities, believes that switching the main operation variety of the open market to overnight and the main policy interest rate to overnight reverse repurchase rate will help improve the sophistication of liquidity management, better "peak-shaving and valley-filling", and improve the policy's control over market interest rates; second, it will match the market interest rate with the policy interest rate period and smooth out the policy interest rate transmission mechanism.
Many experts reminded the market that the central bank's "anchor change" is still part of the reform of the monetary policy framework and should not be over-interpreted. Wang Jian, chief analyst of the financial industry at Guosen Securities Economic Research Institute, believes that the core of this adjustment of the monetary policy framework is the selection of policy interest rates and the optimization of interest rate control mechanisms. It does not involve adjustments to the interest rate level itself. Adjustments to the operating period, policy interest rate varieties and pricing benchmarks cannot be directly understood as interest rate cuts or interest rate increases, and it is not appropriate to judge whether the stance of monetary policy has changed based on this.
Guo Lei, chief economist of GF Securities, also mentioned that the central bank continues to improve its monetary policy control framework. A series of institutional designs are in line with the idea of transforming to a price-based framework. The market must avoid hyping the directional transformation plan into an interest rate cut.
Some experts also believe that the switch of the main policy interest rates is a matter of course. "For the bond market, the downward shift in the center of funding interest rates has been reflected to a considerable extent in the certificate of deposit and medium- and long-term bond markets." Zhang Xu, chief analyst of fixed income at Everbright Securities, said that the central bank's statement of "study and selection of opportunities" means that the direction has been clear and the timing has left room. The formal implementation of maturity switching still needs further maturity of the operational arrangements. At this time, the market should not "jump away" prematurely.
