(Yicai) Feb. 4 -- China’s central bank has stepped up liquidity support using a mix of tools, including a larger three-month outright reverse repurchase operation, to meet the surge in household cash withdrawals before the start of what will be the country’s longest-ever Lunar New Year holiday.

The People’s Bank of China will conduct a CNY800 billion (USD115.3 billion) three-month outright reverse repo operation today, it said yesterday. As CNY700 billion of three-month outright reverse repos will mature this month, the operation will result in a net injection of CNY100 billion.

This is the first time since last November that the PBOC has increased the size of its three-month outright reverse repo operations.

Outright reverse repo operations are a liquidity injection tool introduced by the PBOC in 2024. Typically, the bank conducts one three-month and one six-month operation each month to offset maturing amounts for that month.

Today’s move is intended to counter potential liquidity tightening and keep market funding conditions adequately ample and stable ahead of the holiday, said Wang Qing, chief macroeconomic analyst at Golden Credit Rating International.

This year’s Lunar New Year holiday, known as the Spring Festival in China, will run for nine consecutive days from Feb. 15 to 23. That is one day more than in previous years, making it the longest Spring Festival on record.

The PBOC is expected to conduct a six-month outright reverse repo operation around Feb. 15, likely rolling over or increasing the CNY500 billion maturing this month, said Dong Ximiao, chief economist at Merchants Union Consumer Finance.

A medium-term lending facility operation is also scheduled around Feb. 25 and is similarly expected to be rolled over at the same or a greater size, Dong noted.

Separately yesterday, the PBOC disclosed details of its January monetary operations, showing a net injection of CNY100 billion through open-market government bond trading, double the size of December’s net injection.

Such a large front-loaded liquidity injection has reduced the likelihood of a near-term cut to the reserve requirement ratio -- the amount of cash banks must hold in reserve -- particularly ahead of the Chinese New Year holiday, Dong pointed out.

Editors: Dou Shicong, Futura Costaglione