# China monetary policy and financial reforms

> Developing situation record from CLSTR: https://clstr.news/situations/china-monetary-policy-and-financial-reforms
> Updated: 2026-10-30T00:24:56.000Z. Sources: 8. Developments: 3.

The People’s Bank of China (PBoC) has initiated a series of measures to stimulate economic growth and reform financial market structures.

In late September 2026, the PBoC announced significant monetary stimulus, including a 25 basis point reduction in the one-year Pledged Supplementary Lending (PSL) rate from 1.75% to 1.5%. The bank expanded PSL scope to include infrastructure such as water, power, and logistics, while increasing re-lending quotas for technological innovation, agriculture, and small businesses. To support the housing market, a national mortgage interest subsidy policy was introduced, providing a 1% annual interest subsidy for up to five years on qualifying first-time homebuyer commercial mortgages for homes under 120 square meters and priced below 1.5 million yuan.

By late October 2026, the focus shifted toward structural reforms. Governor Pan Gongsheng proposed transitioning primary open market operations to overnight reverse repos to establish a new main policy rate. This transition was finalized with the PBoC setting the overnight reverse repurchase agreement rate at 1.25%, which is lower than the 1.4% seven-day benchmark rate. The bank also moved toward conducting daily overnight reverse repo operations and implementing multiple rates for seven-day transactions.

Additional reforms include introducing liquidity support tools for non-bank financial institutions to manage bond market redemption risks, diversifying loan pricing benchmarks, and piloting a program to allow eight domestic and foreign RMB clearing banks to conduct proprietary trading in the domestic interbank foreign exchange market.

## Timeline

### 2026-10-30: PBOC shifts policy focus to overnight reverse repo rate

The People’s Bank of China has set its new overnight reverse repurchase rate at 1.25 percent, transitioning to the overnight rate as its main policy lever.

2 sources. https://clstr.news/cluster/pboc-shifts-policy-focus-to-overnight-reverse-repo-rate

### 2026-10-20: People's Bank of China announces interest rate and liquidity reforms

PBOC Governor Pan Gongsheng announced plans to shift toward overnight repo rates as the primary policy rate and introduce liquidity support tools for non-bank financial institutions.

2 sources. https://clstr.news/cluster/peoples-bank-of-china-announces-interest-rate-and-liquidity-reforms

### 2026-09-29: People's Bank of China announces major monetary stimulus and mortgage subsidies

The People's Bank of China is implementing major stimulus measures, including cutting PSL rates, increasing re-lending for tech and small businesses, and launching a national mortgage interest subsidy program.

4 sources. https://clstr.news/cluster/peoples-bank-of-china-announces-major-monetary-stimulus-and-mortgage-subsidies

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Cite as: China monetary policy and financial reforms. CLSTR, https://clstr.news/situations/china-monetary-policy-and-financial-reforms