# Oct 30 China–US Policy Brief: PBOC Switches Policy Anchor to Overnight 1.25%, BOJ Declares Inflation Target Met

Source: https://aistim.cn/en/policy/policy-20261031-09f4c8fc
Language: en
Published: 2026-10-31T00:23:09.315Z
Updated: 2026-10-31T00:23:09.315Z
Author: AISTIM

The PBOC switches its policy anchor to the overnight repo at 1.25% from November 2; the BOJ holds at 1.25% and declares underlying inflation at its 2% target for the first time; US Q3 labor costs rise 0.8% as Fed officials talk up December hikes; watchlist: ExxonMobil, Chevron, ServiceNow, BP.

## US Policy

### Fed December-hike odds: three Fed officials talk up more hikes on October 30 (market pricing, not a commitment)

On October 30, Dallas Fed President Lorie Logan said she would like to see two more quarter-point rate increases in the near future; St. Louis Fed President Alberto Musalem and Richmond Fed President Tom Barkin voiced similar concerns the same day, arguing the case for higher rates was clear. This came just two days after the Federal Reserve held rates at 3.75% to 4.00% in a 10–2 vote on October 28, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting in favor of an immediate hike. Market pricing differs by vendor and snapshot: Barron's reported on October 30 that CME FedWatch showed about 73% of investors expecting a December hike, another aggregator put FedWatch at 71.4%, and a Reuters-based reading put futures-implied odds near 80%. The direction is consistent even if the numbers differ. The decisive data before the December 8–9 meeting are the second estimate of Q3 GDP and October PCE, both due November 25.

### US Q3 employment cost index up 0.8%, wage growth slowest since early 2021 (confirmed)

The Bureau of Labor Statistics reported on October 30 at 8:30 a.m. Eastern that the Employment Cost Index rose 0.8% in the third quarter, down from 0.9% in the second quarter and in line with expectations; wages and salaries rose 0.7% quarter over quarter while benefit costs rose 0.9%. Over 12 months, total compensation rose 3.4%, unchanged from the year through June; wages rose 3.1%, the slowest annual pace since early 2021, while benefits rose 3.9%, the fastest since the third quarter of 2023, with private-employer health-insurance costs up about 6.4% over the year. Inflation-adjusted private-industry wages fell 0.6% over the year, a second straight quarterly decline. The ECI is one of the Fed's preferred leading indicators of core inflation because it controls for shifts in the mix of jobs. The mix here is two-sided: cooling wage growth helps the inflation fight, but accelerating benefit costs mean total labor costs are not falling in step. The next ECI release is scheduled for January 29, 2027.

### Bank of Japan holds at 1.25%, declares underlying inflation at its 2% target for the first time (confirmed)

The Bank of Japan's October 29–30 meeting voted 8–1 to hold its short-term policy rate at 1.25%, still the highest since 1995; board member Hajime Takata dissented, proposing an immediate hike to 1.5%. This was the first pause after hikes in June and September 2026. In its quarterly outlook, the BOJ said for the first time since adopting its 2% target in 2013 that underlying inflation had reached a level broadly consistent with that target, and it raised its fiscal-2027 core inflation forecast to 2.6% from 2.4%, warning of upside risks to prices. The board also voted unanimously to accelerate sales of its ETF holdings from about 330 billion yen a year to about 860 billion yen a year from January 2027. A Reuters poll found most analysts expect a hike to 1.5% in December. Central banks diverged this week: the Fed, the European Central Bank, the BOJ and the Reserve Bank of New Zealand all held, while the Bank of Canada raised rates 25 basis points to 2.50%, its first increase since August 2023.

### US stocks on October 30 and Big Oil earnings (confirmed)

US stocks fell sharply on October 30: the Dow lost 1.09% to 51,770.31, the S&P 500 fell 1.82% to 7,580.07, and the Nasdaq Composite dropped 2.86% to 25,437.00, its biggest one-day fall since June 5, while the Philadelphia Semiconductor Index plunged 7.20%. Intel collapsed 28.58% to $65.76, its worst day since the 1970s, after weak fourth-quarter guidance; Amazon fell 1.4% to $240.35; energy rose 1.91% to lead sectors. Spot gold fell below $4,000 an ounce and Bitcoin dropped about 1.8% to roughly $76,353. Reuters reported that ExxonMobil and Chevron both beat expectations on Friday: ExxonMobil earned $15.4 billion, with refining profits of $7.17 billion edging out upstream profits of $7.09 billion for the first time in at least six years, while Chevron earned $9.9 billion as downstream profits reached $4.93 billion versus $1.14 billion a year earlier, with US refineries processing a record 1.09 million barrels a day at nearly 98% utilization. The driver is war-driven refining margins: the Gulf Coast 3-2-1 crack spread rose 28% versus the second quarter and peaked at an all-time high of $72.64 on September 22, and high fuel prices have become a political flashpoint ahead of the November 3 US midterm elections.

## China Policy

### PBOC switches its policy-rate anchor to the overnight repo at 1.25% from November 2 (confirmed)

The People's Bank of China announced on October 30 that, to further optimize its short-end interest-rate framework, from November 2 it will conduct overnight reverse-repo operations every working day via fixed-rate, quantity tenders, currently at 1.25%; the 7-day reverse repo will switch to fixed-quantity, interest-rate tenders with multiple-price allotment and will be used mainly around tax periods and month-ends; and other tools previously priced off the 7-day rate will now be priced off the overnight rate with unchanged spreads. This implements Governor Pan Gongsheng's October 19 Financial Street Forum preview that the main operating tenor would switch to overnight and the overnight repo rate would become the main policy rate. On October 30 itself, the PBOC conducted 15 billion yuan of 7-day repos at 1.40% plus 10 trillion yuan of overnight repos, for net injections of 15 billion yuan — an eighth straight day of net injections — with weekly net injections of 1,411 billion yuan, a three-and-a-half-month high. The overnight repo has hit its 1-trillion-yuan operating cap for four straight sessions; the October 30 weighted DR001 rate was 1.2890%, and the October average of 1.2805% is about 10 basis points below September's. Analysts read the switch as confirming the existing funding center rather than fresh easing; the test from November 2 is whether DR001 stays close to 1.25%.

### CSRC studies the Fifth Plenary spirit; NDRC drafting an expand-domestic-demand strategy for 2026–2030 (confirmed)

China Securities Regulatory Commission Party Secretary and Chairman Wu Qing chaired an expanded Party committee meeting on October 30 to study and implement the spirit of the Fifth Plenary Session of the 20th CPC Central Committee, with detailed measures to follow in an official statement. Separately, market reports on October 30 said the National Development and Reform Commission is studying and drafting an implementation plan for the expand-domestic-demand strategy for 2026–2030 and will push for its prompt release, a backdrop to consumer stocks rallying against the market that day. Expanding domestic demand is a core theme for the first year of the 15th Five-Year Plan period, alongside financial support for services expansion, the mortgage subsidy and trade-in programs; once released, the watch items are funding and project lists for consumption vouchers, commercial-district upgrades, elderly care, childcare, culture, tourism and sports.

### A-share third-quarter reporting season closes: 46 stocks rated "above expectations" (confirmed)

October 30 was the deadline for A-share third-quarter reports. According to a People's Finance summary, brokers rated 46 stocks' results "above expectations," citing sharply improved operating efficiency, rising industry sentiment, better supply-demand balances and booming overseas business; those 46 stocks have gained 16.1% on average this year, with 33 trading below 30 times trailing earnings and 34 growing first-three-quarter net profit by more than 20%. Attention now turns to November disclosures, including YonYou Network's third-quarter report and 18 banks' third-quarter reports due October 31, and to whether the "above expectations" cohort sustains its edge.

## US-Stock Watchlist

### ExxonMobil (XOM)

Q3 net earnings were $15.4 billion and adjusted EPS of $4.23 beat the $4.08 consensus; refining earnings of $7.17 billion edged out upstream earnings of $7.09 billion, and the gap was wider on an adjusted basis ($9.05 billion versus $7.31 billion); the company cut debt by $8 billion in the quarter and plans $20 billion of buybacks in 2027. Shares closed October 30 at $187.25, up 2.16%. Analyst price targets: a TipRanks average of $178.06 (Moderate Buy consensus), UBS $199 (Buy) and Barclays $200 (Overweight). Risk: refining margins can mean-revert, and crude prices were highly volatile in the quarter (Chevron's CFO noted Brent spot swung from $68 to $132 a barrel), so the refining windfall may not repeat. For informational purposes only, not investment advice.

### Chevron (CVX)

Q3 net income was $9.9 billion and adjusted EPS of $5.28 beat the $4.89 consensus; downstream earnings of $4.93 billion were far above $1.14 billion a year earlier and the highest for the period, with US refineries processing a record 1.09 million barrels of crude a day at nearly 98% capacity; net debt fell nearly $14 billion from end-2025. Shares closed October 30 at $235.52, up 1.75%. Analyst price targets: a TipRanks average of $237.94 (Strong Buy consensus) and Bank of America $252 (Buy). Risk: downstream profits depend heavily on crack spreads, which normalize as markets calm; upstream earnings remain exposed to oil-price swings; a planned 7% capacity increase at the Pascagoula refinery by decade-end will take time to pay back. For informational purposes only, not investment advice.

### ServiceNow (NOW)

ServiceNow shares plunged 27% on October 29 to $109.67, the stock's largest one-day percentage decline on record, and fell a further 4.1% in midday trading on October 30 to about $105.12. The trigger was Q3 results: adjusted EPS of $1.00 missed the $1.02 consensus, and guidance for fourth-quarter current remaining performance obligations (contracted revenue expected over the next 12 months) of 18.5% growth decelerated from 20.5% in Q3. Management raised its full-year AI annual-contract-value target for the second time this year, to more than $1.7 billion, but the market focused on the deceleration. Analyst price targets: a MarketBeat consensus of $154.50 (Moderate Buy), Citigroup $157 (Buy) and Morgan Stanley $165 (Overweight). Risk: AI adoption has not yet translated into faster overall growth, the stock still trades near 77 times earnings, and the path back to reacceleration is unclear. For informational purposes only, not investment advice.

### BP (BP)

BP's third-quarter underlying replacement-cost profit was $8.5 billion, far above $2.2 billion a year earlier and the $6.2 billion consensus, putting it in the same "refining windfall" narrative as ExxonMobil and Chevron. Analyst price targets: a TipRanks average of $50.61 (Hold consensus: 3 Buy, 4 Hold, 1 Sell). Risk: refining profits are cyclical and will fade as crack spreads normalize; capital allocation between legacy oil and gas and the energy transition remains uncertain; dollar-reporting swings matter for a London-listed major. For informational purposes only, not investment advice.

By AISTIM

For informational purposes only, not investment advice.