The People's Bank of China once again stepped in to maintain liquidity, achieving a net investment of 378 billion yuan. The central bank announced last week that it would lower the deposit reserve ratio for financial institutions by 0.5 percentage points starting from February 5.
This RRR cut will help protect the New Year's Eve funding and fill the long-term funding gap. The stability of inter-bank interest rates may improve in the short term, and the probability of a sharp surge in inter- bank interest rates is marginally reduced.