Peng Yang

　　Near the end of the month, the People's Bank of China restarted reverse repurchase operations of 100 billion yuan.

On October 25, the People's Bank of China launched a 7-day reverse repurchase operation of 230 billion yuan, and the winning rate was 2.00%, the same as the previous one.

　　Industry insiders said that due to factors such as the October tax period and government bond issuance payments, liquidity may converge in stages.

The People's Bank of China carried out large-amount reverse repurchase operations in a timely manner, providing a thick "safety pad" for maintaining stable liquidity.

Maintain stable liquidity at the end of the month

　　Since October, the People's Bank of China's open market operations have shown a "drip irrigation" state.

For more than a dozen consecutive working days after the National Day holiday, the People's Bank of China only carried out reverse repurchase operations of 2 billion yuan per day.

On October 25, the People's Bank of China invested a large amount of money and launched a reverse repurchase operation of 230 billion yuan.

As 2 billion yuan of reverse repurchase expired on that day, the People's Bank of China realized a net investment of 228 billion yuan in the open market.

　　Regarding the reason for this large-scale investment, the People's Bank of China stated in the open market business transaction announcement that it is to hedge against the impact of factors such as the peak of the tax period and government bond issuance and payment, and to maintain stable liquidity at the end of the month.

　　According to a recent notice from the State Administration of Taxation, the deadline for filing tax returns in October is October 25.

Industry insiders said that the impact of the tax period on the funding rate will be reflected in the period from October 26 to October 27, and the liquidity may gradually converge.

At the same time, inter-month fund requirements may overlap with tax periods, which may amplify liquidity fluctuations.

　　Lou Feipeng, a researcher at the Postal Savings Bank of China, believes that October, as a traditional tax payment month, will have a certain impact on liquidity.

"The large-scale reverse repurchase operation at this time can hedge against the tightening of liquidity caused by factors such as tax payment peaks and stabilize short-term liquidity." He said.

　　Liu Yu, chief analyst of fixed income at GF Securities, predicts that liquidity will gradually turn loose in early November.

Keep liquidity reasonably adequate

　　Open market operations have been intensified, demonstrating the PBC's attitude to maintain reasonable and sufficient liquidity.

Industry insiders expect that the People's Bank of China will continue to use open market operations and structural monetary policy tools to provide liquidity in the follow-up.

　　Maintaining a reasonable and sufficient liquidity is the basis for promoting credit liberalization and supporting stable growth.

The 2022 third quarter regular meeting of the Monetary Policy Committee of the People's Bank of China emphasized that it is necessary to further unblock the monetary policy transmission mechanism, maintain reasonable and sufficient liquidity, enhance the stability of the growth of total credit, and maintain the growth rate of money supply and social financing scale in line with nominal economic growth. The speed is basically matched.

　　"It is expected that liquidity will remain reasonably sufficient before the end of the year, and money market interest rates will remain stable," said CITIC Securities' chief economist.

　　Xie Yunliang, chief macro analyst at Cinda Securities, believes that with sufficient quotas, structural monetary policy tools can effectively supplement liquidity.

　　Market participants expect that the People's Bank of China will continue to strengthen the implementation of a prudent monetary policy, comprehensively use a variety of monetary policy tools such as quantity and price, optimize the policy mix, maintain a state of reasonable and sufficient liquidity, keep market interest rates running smoothly, and give full play to the currency. The dual functions of total amount and structure of policy tools strongly support the real economy.