DR007 Climbs Back Above 1.4% Policy Rate on June 9, Funding Returns to Balance

According to Shanghai Securities News, on June 9, DR007 (7-day weighted average repo rate) climbed back above the 1.4% policy rate after running below this level for over two months. Multiple institutions attributed the recent tightening of funding conditions to medium- to long-term funding tool operations, bond payments, rising precautionary liquidity demand from institutions, and declining lending from major banks. The return of rates to policy levels signals funding prices normalizing from an extremely loose state rather than an imminent shift toward monetary tightening.
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