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Category Archives: Monetary

Chart: HKMA Bought a Total of HK$174.561 billion Since May 12, 2022

When US$ touched HK$7.85 upper limit

Updated on 7/29/22

香港銀行體系總結餘將於8月2日跌至1535.79億港元。


Updated on 7/24/22


Source : HKET


Source : Trading Economics and Ming Pao

Charts: The ECB Raised Its 3 Key Interest Rates by 50bps in July 2022

The first increase since 2011, ending eight years of negative rates.

Source : Trading Economics

Chart: Global Gold Reserve vs. Global US Treasury in June 2022

Source : Bloomberg

New Zealand’s Central Bank Lifts Benchmark Cash Rate to 2.5%

New Zealand’s central bank on Wednesday lifted its benchmark interest rate by half a percentage point to 2.5% as it attempts to curb inflation.

It was the third time this year that the Reserve Bank of New Zealand has lifted the cash rate by 50 basis points, following hikes in April and May. There was also a quarter percentage point rise in February.

The bank has forecast that the rate will peak at 4% late next year.

It said in a statement that it “remains appropriate to continue to tighten monetary conditions at pace to maintain price stability and support maximum sustainable employment.”

New Zealand’s inflation is running at 6.9% and the unemployment rate is 3.2%.

The bank manipulates interest rates to try to contain inflation to a target band between 1% and 3%.

The bank will next consider raising the cash rate at its meeting on Aug. 17.


Source : AP

Chart: China Sold Over US$100 billion U.S. Treasury in the Last 6 Months

Holdings fell below US$1 trillion for the first time since June 2010

Source : Bloomberg

Chart: Canada Central Bank Raised Interest Rate by 1%

Largest Bank of Canada rate hike since 1998

The Bank of Canada joins more than 30 other central banks around the world that have raised interest rates by a full percentage or more this year.


Source : Bloomberg

Charts: China Foreign Exchange Reserves Declined in June 2022

The lowest since March 2020

Source : Trading Economics

Infographic: Interest Rate Hikes vs. Inflation Rate, by Country

See large image . . . . . .

Source : Visual Capitalist

China Creates Yuan Liquidity Reserve Pool With BIS, Five Others

The People’s Bank of China will create a yuan reserve pool with the Bank for International Settlements and five other regulators to provide liquidity to participating economies in periods of market volatility.

China along with Indonesia, Malaysia, Hong Kong, Singapore and Chile will each contribute a minimum of 15 billion yuan ($2.2 billion) or US dollar equivalent to so-called Renminbi Liquidity Arrangement, according to a PBOC statement on Saturday. The funds will be placed with the BIS.

“When in need of liquidity, participating central banks would not only be able to draw down on their contributions, but would also gain access to additional funding through a collateralised liquidity window,” according to the statement.

The agreement marks the latest step from Beijing to push the internationalization of the Chinese currency, challenging a global financial system dominated by the US dollar.


Source : BNN Bloomberg

Banking Body Urges Decisive Wave of Global Rate Hikes to Stem Inflation

Marc Jones wrote . . . . . . . . .

The world’s central bank umbrella body, the Bank for International Settlements (BIS), has called for interest rates to be raised “quickly and decisively” to prevent the surge in inflation turning into something even more problematic.

The Swiss-based BIS has held its annual meeting in recent days, where top central bankers met to discuss their current difficulties and one of the most turbulent starts to a year ever for global financial markets.

Surging energy and food prices mean inflation in many places is now its hottest in decades. But the usual remedy of ramping up interest rates is raising the spectre of recession, and even of the dreaded 1970s-style “stagflation”, where rising prices are coupled with low or negative economic growth.

“The key for central banks is to act quickly and decisively before inflation becomes entrenched,” Agustín Carstens, BIS general manager, said as part of the body’s post-meeting annual report published on Sunday.

Carstens, former head of Mexico’s central bank, said the emphasis was to act in “quarters to come”. The BIS thinks an economic soft landing – where rates rise without triggering recessions – is still possible, but accepts it is a difficult situation.

“A lot of it will depend on precisely on how permanent these (inflationary) shocks are,” Carstens said, adding that the response of financial markets would also be crucial.

“If this tightening generates massive losses, generates massive asset corrections, and that contaminates consumption, investment and employment – of course, that is a more difficult scenario.”

World markets are already suffering one of the biggest sell-offs in recent memory as heavyweight central banks like the U.S. Federal Reserve – and from next month the ECB – move away from record low rates and almost 15 years of back-to-back stimulus measures.

Global stocks are down 20% since January and some analysts calculate that U.S. Treasury bonds, the benchmark of world borrowing markets, could be having their biggest losing first half of a year since 1788.

CREDIBILITY

Carstens said the BIS’s own recent warnings about frothy asset prices meant the current correction was “not necessarily a complete surprise”. That there hadn’t been “major market disruptions” so far was also reassuring, he added.

Part of the BIS report published already last week said that the recent implosions in the cryptocurrency markets were an indication that long-warned-about dangers of decentralised digital money were now materialising.

Those collapses aren’t expected to cause a systemic crisis in the way that bad loans triggered the global financial crash. But Carstens stressed losses would be sizeable and that the opaque nature of the crypto universe fed uncertainty.

Returning to the macro economic picture, he added that the BIS didn’t currently expect a period of widespread stagflation to take hold.

He also said that though many global central banks and the BIS itself had significantly underestimated how quick global inflation has spiralled over the last six to 12 months, they weren’t about to lose hard-earned credibility overnight.

“Yes, you can argue a little bit here about an error of timing of certain actions and the responses of the central banks. But by and large, I think that the central banks have responded forcefully in a very agile fashion,” Carstens said.

“My sense is that central banks will prevail at the end of the day, and that would be good for their credibility.”


Source : Reuters