People's Bank of China sets overnight reverse repo rate at 1.25%

The setting is routine upkeep of liquidity, and the central bank continues to work through narrow tools rather than its main policy rate.

The People's Bank of China set its overnight reverse repo rate at 1.25%, a routine liquidity operation that matches the level it kept unchanged weeks ago and carries no new signal on policy.

The bank's easing this autumn has come through narrower channels. In September it cut its prime lending facility rate by 0.25 points to 1.5% and adjusted other tools alongside. Governor Pan Gongsheng then announced a liquidity backstop for redemptions at non-bank institutions at the Financial Street Forum in Beijing, together with a pledge to widen foreign access to China's bond market. A planned shift toward overnight tenors points the same way: the aim is precision, not a broad move in the policy rate.

Credit policy follows that pattern. The bank intends to expand support for the service sector rather than lend more across the economy. Credit data for January to September have already beaten expectations, so this operation reads as maintenance of existing conditions, not a response to fresh stress.

The bank has also been firm about stability. It says it does not plan to devalue the yuan for trade purposes, has pledged to strengthen the foreign exchange market, and has warned against herd behaviour in markets. That is a central bank trying to keep conditions calm without opening the credit taps, which is the right instinct. Until it changes the policy rate itself, the targeted tools are where any real shift will show.