PBOC to Switch Main Open Market Operation Maturity to Overnight, Reform Lending Rate Pricing Mechanisms

Pan Gongsheng, governor of the People's Bank of China (PBOC), announced at the 2026 Financial Street Forum Annual Conference that the central bank will study and switch the maturity of its main open market operations from the current 7-day reverse repo to overnight, making the overnight reverse repo rate the new policy rate. This move aims to enhance the precision of interest rate control. Additionally, Pan revealed plans to reform lending rate pricing mechanisms by diversifying the pricing bases beyond the current Loan Prime Rate (LPR). The PBOC will also introduce various measures to support financial stability and innovation, including a liquidity support tool for large non-bank institutions, expanded standing lending facilities, and guidelines for financial support to build international tech innovation centers in Beijing (Jing-Jin-Ji). Furthermore, the PBOC plans to pilot allowing eight onshore and offshore RMB clearing banks to conduct proprietary trading in the domestic interbank foreign exchange market.