China’s central bank goes daily on 1.25% overnight repo, moving to Fed-style anchor - investingLive

China's central bank has moved to a daily schedule for its 1.25% overnight reverse repurchase operations, a shift that gives the People's Bank of China a more frequent, visible tool for steering short-term funding costs. The change echoes how the Federal Reserve uses its overnight repo facility as a standing anchor for money-market rates.

The practical significance lies in the signal rather than the rate itself. A daily operation makes the 1.25% level a clearer reference point for banks pricing overnight liquidity, which can reduce the day-to-day volatility that has occasionally appeared in Chinese interbank markets. It also gives policymakers a steadier lever for managing seasonal funding pressures around quarter-ends and tax periods.

What to watch: whether overnight rates trade consistently near the 1.25% anchor, and whether the daily schedule smooths spikes during periods of tight liquidity. Analysts will also track how the facility interacts with other PBOC tools, such as medium-term lending and reserve requirements, since the overall stance of policy is set by that mix rather than by any single rate. For global investors, a more predictable short-term rate framework in China can influence cross-border funding and currency-hedging costs.