PBOC’s Rising Focus on Overnight Rate Spurs Talk of Policy Shift

The Chinese central bank’s heightened focus on the overnight money market rate is fueling speculation that it may eventually move toward adopting this tenor as its primary policy target.

The People’s Bank of China re-ordered its monthly report published late Wednesday by moving money market conditions to the first section before bonds, a structure unseen in at least two decades. It also added an analysis of the interest-rate levels of pledged bond repurchases, highlighting the comparison of the overnight repo cost to its seven-day reverse repo rate.