On February 3, the People's Bank of China announced that, in order to maintain ample liquidity in the banking system, it will conduct an 800 billion yuan outright reverse repo operation on February 4, using a fixed amount, interest rate bidding, and multiple-price winning method, with a maturity of 3 months (91 days).

On the same day, the central bank's data on liquidity injections via various tools in January 2026 showed a net injection of 100 billion yuan through open market government bond transactions.

The outright reverse repo operation was increased in size. According to Wind statistics, 700 billion yuan in 3-month outright reverse repos are set to mature in February, meaning the central bank's operation on February 4 will result in a net injection of 100 billion yuan.

"This is the first time since November 2025 that the 3-month outright reverse repo has been rolled over with an increased amount," said Wang Qing, Chief Macro Analyst at Golden Credit Rating. He noted that, aiming to address potential liquidity tightening, the central bank's injection of medium-term liquidity into the banking system via outright reverse repos can guide pre-holiday funding conditions to remain in a stable and ample state.

Overall, a total of 1.5 trillion yuan in medium to long-term liquidity is set to mature in February, comprising 700 billion yuan from 3-month outright reverse repos, 500 billion yuan from 6-month outright reverse repos, and 300 billion yuan from Medium-term Lending Facility (MLF) operations.

"February remains a month with relatively concentrated bank credit extension, and coupled with the impact of cash withdrawals before the Spring Festival, market demand for liquidity increases," said Dong Ximiao, Chief Economist at Zhaolian.

Based on this, Dong Ximiao expects the central bank to conduct a 6-month outright reverse repo operation around February 15, likely rolling it over at an equivalent or increased amount, thereby achieving a net injection via outright reverse repos for the month. Furthermore, around February 25, the central bank is also expected to conduct an MLF operation, again likely rolling it over at an equivalent or increased amount. By utilizing both outright reverse repos and MLF operations, the central bank has been injecting short to medium-term liquidity into the market for several consecutive months, effectively maintaining ample market liquidity, ensuring stable financial market operations around the year-end and beginning, and further improving the maturity structure of market liquidity.

Ming Ming, Chief Economist at CITIC Securities, believes that looking ahead, February's funding faces dual pressures of crossing the holiday period and cash demand disturbances; he anticipates that subsequent 6-month outright reverse repos, MLF operations, and government bond purchases might maintain the broad injection approach seen in January.

The scale of net injections via government bond transactions increased. Looking at the central bank's liquidity injections via various tools in January 2026, the PBOC injected liquidity through multiple policy instruments, covering terms from short to long-term. Among these, the net injection scale from open market government bond transactions increased compared to the previous month, reaching 100 billion yuan.

Ming Ming stated that government bond supply in January was significantly higher compared to the same period last year, and accordingly, the scale of the central bank's open market government bond transactions expanded to 100 billion yuan, which helped improve bond market sentiment and led to a downward shift in the yield curve.

"Such a large-scale liquidity injection does indeed reduce the urgency and possibility of implementing a comprehensive RRR cut in the short term, especially before the Spring Festival," Dong Ximiao said.

PBOC Governor Pan Gongsheng previously stated that the bank will improve a base money injection mechanism with a mix of short, medium, and long-term tools suited to Chinese characteristics, gradually increasing the role of government bond transactions in liquidity management, and maintaining ample liquidity in the banking system.

Looking forward, Dong Ximiao believes there will be two changes in monetary policy for 2026: first, a slight adjustment in policy target wording, with the goal for overall social financing costs shifting from "stable with a slight decrease" to "maintaining low levels"; second, a shift in policy thinking, focusing more on enhancing the efficiency of existing policies rather than simply intensifying them.

Dong Ximiao believes that temporarily avoiding the use of aggregate tools like a comprehensive RRR cut aligns with the current policy thinking. However, this does not mean the window for a comprehensive RRR cut is closed; it remains an important option in the central bank's toolkit.

Ming Ming believes that, considering the central bank's positive statements regarding RRR cuts and interest rate cuts within the year, the possibility of a RRR cut materializing during periods of concentrated government bond supply in the future cannot be ruled out.