PBoC may shift to using overnight reverse repos as its key policy tool following recent liquidity operations, according to Securities Daily citing an analyst

A shift toward the short-tenor reverse repo as the primary policy signal would formalise a direction Chinese rate operations have been drifting for some time: elevating the overnight or seven-day tenor as the anchor while the medium-term lending facility recedes from its signalling role, with the MLF increasingly run as a pure liquidity tool priced off the market rather than as a rate-setter. Central banks that have re-anchored around a single short rate have generally done so to tighten the corridor between the target and traded money market rates, which steepens the link from policy to the front end of the CNY curve and dilutes the informational content of mid-tenor operations. The provenance matters here: a state-run securities daily citing an analyst is the kind of venue through which official thinking in China has historically been aired before formal adoption, a soft signal rather than a decision, and on previous occasions such framing has preceded operational tweaks by weeks rather than days. The tells to follow are the frequency and pricing of daily open-market operations, whether the MLF is rolled at market-consistent rates, and any change to the corridor around the repo tenor in question. Until a formal statement, this is a structure-of-the-framework story, not a change in the stance of policy.