International News 16/05

May 16, 2024 No. 76

China's central bank has maintained its key interest rate at the anticipated level.

The People's Bank of China (PBOC) has decided to maintain its interest rates at their current level, which was anticipated by the market. The interest rate on 125 billion yuan of one-year medium-term lending facilities (MLF) remains at 2.50%. This decision is in line with the majority of market analysts who predicted that the PBOC would leave the MLF rate unchanged. The expiration of 125 billion yuan worth of MLF loans this month did not result in any new injections or withdrawals of funds from the banking system. Furthermore, the central bank injected 2 billion yuan through seven-day reverse repos, maintaining the borrowing cost at 1.80%.


The Bank of Japan (BOJ) has reduced its purchases of government bonds, sending a hawkish signal to the market.

The Bank of Japan has sent a clear signal to the market by reducing the amount of Japanese government bonds (JGBs) offered for purchase in regular operations. This is the first time the Bank of Japan has reduced its purchase offer since December. The reduced bond purchase offer is in line with the bank's recent hawkish stance, as outlined in the minutes of the last policy meeting in April. Some members of the board believe there may be a possibility of a rate hike sooner than expected, particularly if the weak yen leads to inflation. BOJ Governor Kazuo Ueda has indicated the possibility of multiple rate hikes, stating that the bank should respond with monetary policy if currency volatility affects inflation trends. Consequently, yields on 10-year JGBs increased to 0.935%, the highest level since November, while two-year JGB yields reached 0.32%, a level not seen since November.


The owner of the largest gold foreign exchange reserves in the world. The Federal Reserve and the German Central Bank.

The US Federal Reserve and the German Bundesbank have the largest gold reserves among the world's central banks. The Fed's gold reserves were recorded at 8,133.5 tonnes in March 2024, accounting for 71.3% of the country's gold reserves. However, the volume of the Fed's gold reserves has stagnated in recent years, with 8,133.46 tonnes in 2022 and 2023.

Similarly, the Deutsche Bundesbank's gold reserves stood at 3,352.3 tonnes in March 2024, representing 70.6% of the country's gold reserves. However, Germany's gold foreign exchange reserves have also stagnated and even declined, with 3,352.65 tonnes in 2023 and 3,355.14 tonnes in 2022.

In comparison, the People's Bank of China (PBoC) and the Bank of Japan (BoJ) have lower gold reserves. The PBoC has 2,262.4 tonnes of gold reserves, which has risen sharply in the last two years, with 423.63 tonnes in 2022 and 2,235.39 tonnes in 2023.