Standard Chartered’s Shuang Ding and Hunter Chan note that the People’s Bank of China has shifted its operational focus from DR007 to DR001, aligning with the dominance of overnight repos in China’s interbank market. They expect short-term money market rates to remain mostly below the 7-day reverse repo policy rate, and see a gradual move toward an overnight policy rate framework.

PBoC seen gravitating to DR001 anchor

"The 7-day reverse repo rate was established as China’s sole policy rate in mid-2024."

"However, since May 2025, when the PBoC published the Q1 Monetary Policy Implementation Report, it has used the overnight rate (DR001) to monitor deviations of money market rates from the policy rate."

"In its Q1-2026 Report, the central bank pledged to keep the overnight money market rate close to the policy rate."

"This shift in focus to DR001 suggests the PBoC’s preference to use the overnight rate as the money-market rate anchor."

"We expect the PBoC to eventually move to adopting the overnight policy rate to resolve the tenor mismatch between the DR001 and the 7D policy rate."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)