In order to maintain sufficient liquidity in the banking system, on February 17, the People's Bank of China (hereinafter referred to as "the People's Bank of China") carried out a 7-day reverse repurchase operation of 190.5 billion yuan in the form of fixed interest rate and quantitative bidding, and the operating interest rate remained unchanged at 1.5%. Given that 229 billion yuan of reverse repurchase expired on that day, the central bank's open market achieved a net withdrawal of 38.5 billion yuan. In fact, except for the net injection of 33 billion yuan on February 11th due to the expiration of non reverse repurchase, the central bank's other single day open market operations during the month resulted in net withdrawal of funds. According to Wind Information data, from February 5th to February 17th (February 1-4 is the Spring Festival holiday), the central bank has cumulatively withdrawn a net capital of 1.6207 trillion yuan through reverse repurchase operations. Regarding the fact that the central bank's open market operations within the month are mainly focused on net withdrawal of funds, Wang Qing, Chief Macro Analyst of Oriental Jincheng, believed in an interview with reporters that there may be two reasons: firstly, after the monetary policy tone shifts from "steady" to "moderately loose", the regulatory authorities focus on guiding financial resources to flow to the real economy, emphasizing the need to "improve the efficiency of fund utilization and prevent fund idleness"; Secondly, the regulatory authorities are taking various measures recently to curb the rapid downward trend of long-term bond yields. From this week, there will be 33 billion yuan, 558 billion yuan, 125.8 billion yuan, and 98.5 billion yuan of reverse buybacks due from February 18th to February 21st, totaling 815.3 billion yuan. In addition, there will be 500 billion yuan of MLF (Medium Term Lending Facility) due on February 18th. It is worth mentioning that in recent months, the central bank has continued to reduce the volume of MLF. Considering that the current DR007 (weighted average interest rate for 7-day repurchase of interbank market deposit institutions) is significantly higher than the central bank's 7-day reverse repurchase rate, and influenced by factors such as the significantly accelerated pace of government bond issuance later this month, it cannot be ruled out that the central bank may resume net open market investment Wang Qing expects that the central bank will continue to reduce the volume of MLF this month and downplay the policy interest rate color of MLF operating rates. At the same time, the central bank may continue to carry out large-scale buyout style reverse repurchases this month, which means that the process of replacing MLF with buyout style reverse repurchases will continue. It is understood that in order to further enrich the monetary policy toolbox, the central bank launched the buyout reverse repo operation tool in October last year, with a term of no more than one year. It won the bid with a fixed number, interest rate bidding, and multiple price levels. The repo target was further expanded, including treasury bond, local government bonds, financial bonds, corporate credit bonds, etc. The operation results were announced at the end of the month. From October last year to January this year, operations worth 500 billion yuan, 800 billion yuan, 1.4 trillion yuan, and 1.7 trillion yuan were carried out respectively, with a cumulative total of 2.7 trillion yuan over a three-month period and 1.7 trillion yuan over a six-month period. In the recently released Q4 2024 China Monetary Policy Implementation Report, the People's Bank of China proposed that the duration of buyout reverse repurchase operations should not exceed one year, filling the tool gap between 7-day reverse repurchase and 1-year MLF in the open market and further improving the accuracy of liquidity management. The Chief Economist of CITIC Securities clearly stated that it is expected that the central bank's open market operations will maintain a "peak shaving and valley filling" operating mode in the near future, and MLF may continue to recover. At the same time, buyout style reverse repurchase will increase the replenishment of medium and long-term liquidity. (New Society)