Trillions of buy-out reverse repurchase agreements will be injected into the market tomorrow. The quantitative policy tools will continue to increase.

The central bank announced that it will conduct 100 billion yuan of reverse repurchase transactions tomorrow, equivalent to the amount of 3-month reverse repurchase transactions conducted earlier this month. Wang Qing from Orient Jincheng stated that there are several reasons behind this: first, government bond issuance will continue to be at a peak in September; second, interbank certificate of deposit maturities in the same month will reach 3.5 trillion yuan, the second highest level this year; third, the current strength of the stock market has led to a noticeable "migration" of residents' deposits, which will also bring about a certain degree of tightening in the money market. Wang Qing predicts that, in order to address the tightening liquidity situation, the central bank will continue the model of increasing the amount of reverse repurchase transactions conducted in the previous 3 months. At the same time, 300 billion yuan of Medium-term Lending Facility (MLF) will mature in September, and the central bank may also increase the amount. This means that the central bank will continue to inject medium-term liquidity into the market by using both MLF and reverse repurchase policy tools in a comprehensive manner in September. On one hand, this will help stabilize market expectations, maintain abundant market liquidity, support government bond issuance, and also send a signal of continuous effort using quantity-based policy tools, demonstrating a continued supportive stance towards monetary policy.