MNI EXCLUSIVE: Former RBA Economist On 2026 Cash Rate Outlook

Money market rates are slowing starting to moderate as the PBOC has another day of significant liquidity injection.  The overnight money market rate spiked yesterday to its highest level since July.  

• The PBOC issued CNY195.5bn of 7-day reverse repo at 1.4% during this morning's operations.
• Today's maturities CNY65.5bn.
• Net liquidity injects CNY130bn.
• The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
• The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.43%, from prior close of 1.51%.
• The China overnight interbank repo rate is at 1.40%, from the prior close of 1.40%.
• The China 7-day interbank repo rate is at 1.49%, from the prior close of 1.51%.

The USD/CNY fix printed at 7.0833, a fresh low back to Oct last year. The fixing error was only marginally tighter at -315pips, versus yesterday's -331pip outcome. This comes despite the USD index moving off recent highs. This will help reinforce the bias around a resilient CNY backdrop. Still, USD/CNH hasn't reacted much, we hold above 7.1200 in latest dealings. We did get to 7.1188 prior to the fixing (which was still above intra-session lows from Tuesday at 7.1173). 

• CHINA PBOC CONDUCTS CNY195.5 BLN VIA 7-DAY REVERSE REPO WEDS