Central bank releases important signal.

On November 4th, the central bank announced that in order to maintain ample liquidity in the banking system, it will conduct 700 billion yuan of reverse repurchase operations on November 5, 2025, with a term of 3 months (91 days), using a fixed quantity, bid rate, and multiple price bidding method. This move aims to stabilize market liquidity expectations and provide strong support for liquidity management at the end of the year. On the same day, the central bank also conducted 117.5 billion yuan of 7-day reverse repurchase operations with an operating rate of 1.40%, unchanged from the previous time. Due to the maturity of 475.3 billion yuan of 7-day reverse repurchase on that day, a net retrieval of 357.8 billion yuan was realized. Although short-term liquidity showed a net retrieval, combined with the announcement of a 700 billion yuan medium and long-term operation on the same day, the overall policy orientation still appears to be loose, reflecting a liquidity management approach of "long-term combined with short-term, with long-term to supplement short-term". On the same day, the central bank also disclosed the liquidity tool deployment of the central bank in October 2025: in that month, a net injection of 20 billion yuan was achieved through open market treasury bond transactions, demonstrating that the central bank is gradually restoring and strengthening the function of treasury bond transactions as a routine liquidity adjustment tool. On the same day, Deputy Governor of the central bank Lu Lei stated at the 2025 International Financial Leaders Investment Summit that in the next step, the central bank will grasp the policy support intensity and pace according to the domestic and international economic and financial situation and the operation of the financial market, and implement and execute various monetary policy tools well to fully release policy effects. He mentioned that since the beginning of this year, the People's Bank of China has implemented a moderately loose monetary policy and introduced a package of policy measures to create a suitable monetary and financial environment for supporting stable economic development. These measures include maintaining reasonable growth of monetary and credit, reducing the comprehensive cost of social financing, and guiding the optimization of credit structure. In a recent research report by CITIC SEC, it was analyzed that the funding situation in October showed a pattern of "loose before tight". Looking ahead to November, considering factors such as the pace of government bond issuance, fiscal expenditure, and central bank treasury bond transactions, it is expected that the liquidity gap will narrow to around a billion yuan. Given the recent restart of central bank treasury bond transactions and the clear intention of policy makers to protect year-end liquidity, it is expected that the funding rates in November will remain low and fluctuate around the center, with a tendency to decrease. In the recently published "Guiding Reader for the Proposal of the Central Committee of the Communist Party of China on Formulating the Fifteenth Five-Year Plan for National Economic and Social Development", an article titled "Constructing a Scientifically Sound Monetary Policy System and a Comprehensive Macroeconomic Prudential Management System" authored by Pan Gongsheng, the Governor of the central bank, was published. In the article, Pan Gongsheng emphasized the optimization of the basic currency injection mechanism and monetary policy intermediate variables to maintain reasonable growth of the overall financial volume. He also emphasized the need to improve the market-based interest rate formation, control, and transmission mechanisms, and to enhance the role of central bank policy rates, narrow the width of the short-term interest rate corridor, and further smooth the transmission of central bank policy rates to market benchmark rates and various financial market rates. This article was reprinted from: Wind Information; GMTEight Editor: Chen Xiaoyi.