Overnight repurchase agreements made their "first appearance" at the end of the month, adding a new tool to control short-term interest rates.

The People's Bank of China announced on June 25th that it will increase the variety of overnight reverse repurchase operations in the open market operations on June 29th and June 30th. The overnight reverse repurchase operations will be conducted through fixed-rate, quantity-based bidding. Similar to the European Central Bank, the main operation variety in China's central bank open market operations is 7-day reverse repurchase. The 7-day reverse repurchase operations effectively maintain short-term interest rates stability. Strengthening overnight rate control is more in line with the trading structure of China's interbank market. Xiong Yuan, Chief Economist of Guosheng Securities, stated that the overnight variety is the most concentrated term of liquidity trading in the interbank market, with significantly higher transaction size and market activity than the 7-day variety, making its price changes better reflect the marginal looseness and tightness of short-term liquidity in the banking system. Currently, short-term market interest rates have risen to near policy rates. Looking ahead to the liquidity situation in the next phase, Wang Qing, Chief Macro Analyst at Dongfang Jincheng, predicts that with the launch of overnight reverse repurchase by the central bank, the central bank's open market operations are expected to be in a state of large-scale net injection by the end of the month, with little possibility of market rates deviating significantly upwards from policy rates.