The central bank increased the six-month buyout reverse repurchase this month to achieve a net investment of 200 billion yuan and continue to inject short- to medium- to short-term liquidity into the market to better maintain abundant market liquidity and ensure the smooth operation of the financial market at the end of the year and the beginning of the year. “The 6-month buyout reverse repurchase increased production for four consecutive months.” Wang Qing, chief macro analyst at Dongfang Jincheng, said that previously, the central bank had launched a 3-month reverse buyout of 1 trillion yuan on December 5 to renew the production in equal amounts. In December, the two-period buyout reverse repurchase increased by a total of 200 billion yuan. The central bank injected medium-term liquidity into the market through buyout reverse repurchases for 7 consecutive months. Wang Qing believes that this operation mainly takes into account that the scale of government bond issuance in December will be at a high level, that new policy financial instruments will drive the growth of supporting loans, and that the maturing volume of interbank deposits will reach 3.7 trillion yuan in December. These factors will have a financial tightening effect to a certain extent. “Focusing on coping with potential liquidity tightening, the central bank continues to inject liquidity into the banking system through buyout reverse repurchases, which will help issue government bonds and guide financial institutions to increase their monetary and credit investment efforts.” Wang Qing said. Another 300 billion yuan medium-term loan facility expires in December. Dong Ximiao, chief researcher at CMB, predicts that the central bank will operate the MLF in equal or increased amounts around the 25th to continue putting medium-term liquidity into the market.

The central bank increased the six-month buyout reverse repurchase this month to achieve a net investment of 200 billion yuan and continue to inject short- to medium- to short-term liquidity into the market to better maintain abundant market liquidity and ensure the smooth operation of the financial market at the end of the year and the beginning of the year. “The 6-month buyout reverse repurchase increased production for four consecutive months.” Wang Qing, chief macro analyst at Dongfang Jincheng, said that previously, the central bank had launched a 3-month reverse buyout of 1 trillion yuan on December 5 to renew the production in equal amounts. In December, the two-period buyout reverse repurchase increased by a total of 200 billion yuan. The central bank injected medium-term liquidity into the market through buyout reverse repurchases for 7 consecutive months. Wang Qing believes that this operation mainly takes into account that the scale of government bond issuance in December will be at a high level, that new policy financial instruments will drive the growth of supporting loans, and that the maturing volume of interbank deposits will reach 3.7 trillion yuan in December. These factors will have a financial tightening effect to a certain extent. “Focusing on coping with potential liquidity tightening, the central bank continues to inject liquidity into the banking system through buyout reverse repurchases, which will help issue government bonds and guide financial institutions to increase their monetary and credit investment efforts.” Wang Qing said. Another 300 billion yuan medium-term loan facility expires in December. Dong Ximiao, chief researcher at CMB, predicts that the central bank will operate the MLF in equal or increased amounts around the 25th to continue putting medium-term liquidity into the market.