Hedging pre-holiday funding needs, the central bank reinitiates 14-day reverse repo operations

Liquidity arrangements around the Chinese New Year have been implemented. On February 5th, the People’s Bank of China conducted a combination operation of 7-day and 14-day reverse repos, achieving a net injection of 64.5 billion yuan into the open market. Industry insiders believe that this move by the central bank is not only a precise hedge against funding needs before the Spring Festival but also reflects refined management of liquidity pace under the backdrop of steady growth. Based on the performance of the funding situation, multiple institutions analyze that although the overall liquidity remains stable, structural tightness still occasionally appears. In the short term, the probability of significant fluctuations in February funding rates is low; from a longer-term perspective, as domestic demand and credit recovery continue, attention should be paid to the possibility of the funding rate center gradually rising. (Shanghai Securities News)