The switching of major policy interest rates has started, and the People's Bank of China has launched a 541 billion yuan overnight reverse repurchase operation.

China News Service, Beijing, November 2 (Tao Siyue) The People's Bank of China announced on November 2 that it has launched a 541 billion yuan overnight reverse repurchase operation using a fixed interest rate and quantity bidding method, with an operating interest rate of 1.25%.

This is the first time the central bank has carried out operations after announcing adjustments to relevant mechanisms on October 30. This means that the duration of the main operating products in the open market is switched to overnight, and the central bank's main policy interest rate "changes the anchor."

According to the central bank’s previous announcement, in order to further optimize the short-end interest rate control mechanism, starting from November 2, open market operations will be adjusted in three aspects:

First, the overnight reverse repurchase operation bidding is carried out every working day, using a fixed interest rate and quantity bidding. The current operating interest rate is 1.25%; second, the 7-day reverse repurchase operation is adjusted to a fixed quantity, interest rate bidding, and multiple price winning bids, mainly during the tax period, the end of the month, etc. Third, other tools that were originally based on the 7-day reverse repurchase operation interest rate plus or minus points, including temporary forward/reverse repos, repurchase tools of overseas central bank institutions, etc., have been adjusted to add or subtract points on the basis of the overnight reverse repurchase operation interest rate, and the range of additions and subtractions remains unchanged.

Experts in the industry believe that this marks a further deepening of price-based regulation, a more short-term approach to main policy interest rates, and the unification of tool benchmarks, which is consistent with the central bank's policy main lines such as "downplaying the focus on quantity targets" and "paying more attention to the role of price-based regulation tools such as interest rates" that the central bank has reiterated many times before.

Wang Qing, chief macro analyst of Oriental Jincheng, judged that the market will continue to pay attention to the impact of the "anchor change" of major policy interest rates on liquidity, which is also an important factor affecting the direction of the bond market in the future. He also reminded that the "anchor change" of the main policy interest rates does not mean a disguised interest rate cut.