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China's Central Bank Announces Policy Support Measures, Hints at Shift to Overnight Policy Rate

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Pan Gongsheng, governor of the People's Bank of China, on Wednesday announced six new financial policy measures at the 2026 Lujiazui Forum in Shanghai, including refining the short-term interest rate regulation mechanism, according to state media Xinhua News.

The operational rates will be adjusted to the seven-day reverse repo rate plus or minus 25 basis points, narrowing the corridor from 70 to 50 basis points, Pan said.

The governor added that the central bank will also enrich its open market operation tools by adding overnight reverse repo operations to better meet short-term liquidity needs in the banking system.

Other measures include creating a repo facility for overseas central banks, studying a macro-prudential liquidity support tool for non-bank institutions, piloting offshore yuan forex trading in the Shanghai Free Trade Zone, issuing an action plan for offshore finance in Shanghai and launching the interbank market data repository.

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