Core Viewpoint - The People's Bank of China (PBOC) has implemented various liquidity measures in July, resulting in a net liquidity injection into the financial system. Group 1: Liquidity Injection Details - In July, the PBOC conducted a Medium-term Lending Facility (MLF) injection of 400 billion yuan, with a withdrawal of 300 billion yuan, resulting in a net injection of 100 billion yuan [1] - The PBOC executed a reverse repurchase agreement (repo) with a total injection of 1.4 trillion yuan and a withdrawal of 1.2 trillion yuan, leading to a net injection of 200 billion yuan [1] - Short-term reverse repos amounted to 56.67 billion yuan in injections and 54.787 billion yuan in withdrawals, achieving a net injection of 18.8 billion yuan [1] - The PBOC provided 116.3 billion yuan through the Pledged Supplementary Lending (PSL) but withdrew 346.3 billion yuan, resulting in a net withdrawal of 230 billion yuan [1] Group 2: Market Operations - In July, the PBOC did not conduct any open market operations involving the buying or selling of government bonds [1]

Core Viewpoint - The People's Bank of China (PBOC) is actively managing liquidity in the banking system through various monetary policy tools, including reverse repos and MLF operations, to ensure sufficient market liquidity while gradually replacing MLF with reverse repos [1][4]. Group 1: Reverse Repo Operations - In February 2025, the PBOC conducted a total of 1.4 trillion yuan in reverse repo operations, consisting of 900 billion yuan for 3-month (91 days) and 500 billion yuan for 6-month (182 days) terms [1][3]. - The reverse repo operations are aimed at maintaining liquidity in the market, with the PBOC continuing to implement these operations despite a reduction in MLF [2][4]. Group 2: MLF and Liquidity Management - The PBOC's MLF operations saw a net withdrawal of 200 billion yuan in February, indicating a strategic shift towards reverse repos for liquidity management [2][4]. - Since October 2024, the PBOC has been reducing MLF balances while ensuring monthly net liquidity injections through various operations, including reverse repos and government bond transactions [4]. Group 3: Future Outlook - The reverse repo operations conducted in February will mature in late May and late August 2025, with additional reverse repos maturing in March and April due to previous operations [5]. - Market experts anticipate that the PBOC will continue to replace MLF with reverse repos, thereby diminishing the significance of MLF interest rates in monetary policy [4].