Latest news with #CentralBanks
CNA
3 days ago
- Business
- CNA
BOJ must ensure fiscal considerations don't overtake mandate, deputy governor says
TOKYO :The Bank of Japan should make clear it is not monetising government debt by ensuring that fiscal considerations do not take precedence over its goal of achieving price stability, Deputy Governor Shinichi Uchida said on Saturday. Central banks can theoretically print unlimited amounts of money and completely finance government debt, which poses delicate questions around their huge government bond purchases conducted to revive their economies, Uchida said. Central banks see "monetising," or directly financing government deficits, as taboo, as doing so risks letting inflation get out of control and potentially eroding their independence. Such unconventional monetary easing steps taken since the 2008 financial crisis present a challenge for central banks across the globe, he said in a speech. The BOJ's monetary easing, for its part, was aimed at achieving its 2 per cent inflation target, and not at funding government debt, Uchida said. "In considering what constitutes monetary financing or not, the important question is whether monetary policy is compromised by fiscal considerations," Uchida said. In deploying and rolling back monetary easing, the BOJ must focus on achieving its economic and price mandate. "The result must be that the Bank does not deviate from such policy conduct out of fiscal considerations," he said. "In its future conduct of monetary policy, the Bank should make it clear that it is not engaging in monetary financing." The remarks come against the backdrop of growing pressure from opposition and ruling parties on Prime Minister Shigeru Ishiba to increase budget spending ahead of an upper house election due next month. Some analysts have blamed concerns over Japan's worsening finances for pushing up super-long bond yields to record highs last month, and complicating the BOJ's efforts to taper its huge bond purchases. Under a radical monetary easing programme deployed in 2013, the BOJ increased purchases of government bonds and adopted a policy of capping long-term interest rates around zero. While the BOJ ended the policy last year, its short-term policy rate is still at 0.5 per cent. The central bank plans to lay out in June a new bond tapering plan for fiscal 2026 and beyond as part of its effort to normalise monetary policy.
Mint
19-05-2025
- Business
- Mint
‘Who will bail you?': Rich Dad Poor Dad author sounds financial crisis alarm, asks people to buy ‘gold, silver, bitcoin'
Bestselling personal finance book, Rich Dad Poor Dad author Robert Kiyosaki on Monday issued a warning about an imminent global financial crisis, sounding an alarm on how the economy functions. In a post on X, Kiyosaki gave the example of the collapse of hedge fund LTCM and how the Wall Street bailed it out in 1998. He then talked about how central banks got together to bail out the Wall Street. However, he asked who would step in to rescue central banks like the US Federal Reserve, urging investors to take matters in their own hands and 'bail' themselves out. 'In 2025, long time friend, Jim Rickards is asking who is going to bail out the Central Banks?' he said in his X post. He blamed former US President Richard Nixon for the compounded crisis that the world faces in the present. 'In other words each crisis gets bigger because they never solve the problem….a problem which started in 1971 when Nixon took the US Dollar off the gold standard,' Kiyosaki said. The Rich Dad Poor Dad author said that the next financial crisis will be triggered due to a collapse concerning student debt. 'According to Jim Rickards the next crisis will be triggered by the collapse of $1.6 trillion in student loan debt,' he said. He asked individuals to bail themselves out. 'As I have been warning for years the best way to protect your self is not by saving fake fiat money. As I stated over 25-years ago, in Rich Dad Poor Dad, 'The rich don't work for money' and 'Savers are losers,'" he said. 'For most people the best way to protect yourself is by bailing yourself out.' Kiyosaki said advised people to save real gold, silver and Bitcoin, saying that the crash that he warned about in his book has started. 'You bail you and your family out by saving real gold, silver, and Bitcoin…. No ETFs. The crash I warned about in Rich Dads Prophecy in 2012 has begun.,' he said. 'If Jim Rickards is correct in asking: 'Who will bail out the Central Banks, like the Fed….a more important question is: 'Who will bail you out?' Please take care… bail yourself out…by saving real gold, silver, and Bitcoin,' Kiyosaki reiterated.
Bloomberg
19-05-2025
- Business
- Bloomberg
African Central Banks to Join Emerging Market Peers Easing Rates
Central banks in key African economies are getting set to line up with other emerging-markets in coming weeks and cut interest rates where inflation pressures are seen abating, or stay on guard where the path is less clear. For most it will be their first rate-setting meeting since the US imposed a 10% universal tariff and slapped China — Africa's largest trading partner — with a 145% levy before reducing it to 30% for 90 days.
Business Recorder
19-05-2025
- Business
- Business Recorder
US-China trade truce
Ultimately, there is a 90-day pause on tariff-related matters between the US and China, which has introduced a degree of stability to the global financial market. The reduction of tariff rates was notably more extensive than what the market had forecasted. Recent economic data from around the world showed varying impacts from this situation across different countries. In the US, consumer sentiment has sharply decreased, falling well below expectations, and optimism among small businesses has diminished, with a lack of enthusiasm in industrial production. In an unexpected turn, the headline inflation figures for the US dropped to 2.3 percent from 2.4 percent, which was below what analysts had anticipated. However, the core inflation rate remained at 2.8 percent year-over-year, as expected. Contrary to this, although the European Union responded to the US tariff actions, robust growth and better employment figures in Europe do not reflect the same downward trend, possibly indicating limited impact from the tariffs on its economy. Meanwhile, Japan's economy contracted, causing a temporary drop in its currency, which later rebounded during the week. The understanding reached between the US and China appears to have stemmed from China's retaliatory actions, contributing to the 90-day truce that has relieved the international business community. Nonetheless, uncertainties remain regarding future outcomes, as a permanent settlement has yet to be attained. The ongoing US-China negotiations are a positive development that may alleviate US inflationary pressures, which are already trending downward and could support a Federal Reserve rate cut. However, the risk lies in the potential for a failure to reach an agreement, as China is known to be a tough negotiator. The US' assertive measures could reflect lessons learned from past experiences, particularly since Chinese imports from the US fell short of commitments in 2020 due to reduced purchases. If a resolution is not achieved within the three-month timeframe, it is quite possible that the agreement period could be extended to stabilize the financial market. The trade truce between the US and China, along with ongoing discussions surrounding Russia and Ukraine, has contributed to some stabilization, leading gold prices to drop nearly 9% from their peak of $ 3,500. Recently, there has been considerable talk about Central Banks purchasing gold. However, these institutions are also closely monitoring positive geopolitical developments, raising the question of why they would rush to buy gold rather than wait for more favourable prices. In the present climate if conditions remain stable, gold prices are likely to continue to decrease. However, a recent development has seen the rating agency Moody's downgrade the USA's credit rating by one notch, from Aaa to Aa1, due to concerns about interest costs and unsustainable debt growth. Although Moody's outlook for the US was improved from negative to stable, this downgrade could initially push gold prices higher. Still, in the absence of Central Bank acquisitions and weak investor interest, gold may lack the support and momentum necessary for significant upward movement. Instead, this week presents more downside risk for gold. In the short term, gold may struggle to surpass the $ 3,260-80 range, and a fall below $3,105 could heighten the risk of testing the $3,050-$3,060 levels. Nevertheless, we are in a period of uncertainty and cannot discount the possibility of abrupt geopolitical developments that could drive investor interest in gold to new highs. This week, key economic indicators to monitor include US weekly jobless claims, the S & P Global flash PMI, and US existing and new home sales, all set to be released on Friday. WEEKLY OUTLOOK - May 19-23 GOLD @ $ 3202— Following the upward movement, gold is anticipated to fall. Resistance levels are found at $ 3242 and between $ 3280-85. If it drops below $ 3135, it could potentially lead to a decline to $ 3105 or $ 3060. EURO @ 1.1165— Euro may experience some upward movement. A rise above 1.1240 would push it towards 1.1305. However, if it drops below 1.1050, it could lead to a decline towards 1.0995. GBP @ 1.3275— Pound Sterling is likely to move up a bit, but it needs to go above 1.3365 to reach 1.3405-15. If it drops below 1.3175, it could fall to 1.3105 levels. JPY @ 145.63— USD has a support level at 144.20, which is expected to persist until it reaches 146.40. A breakthrough at this point could lead to a drop towards 147.20. But if it falls below the support level, it might go down to 143.40. Copyright Business Recorder, 2025
India.com
15-05-2025
- Business
- India.com
Is this deal between China and Saudi Arabia going to end dollar dominance in the world?
(File) China Saudi Arabia Trade: The US Dollar (USD) is the the most dominant currency in global trade, accounting for nearly 54 percent of of foreign trade invoices worldwide, according to various reports. But US' main rival, China, aims to topple the dollar's dominance and promote its own currency, Renminbi (RMB), in bilateral trade. According to reports, China has inked an 'oil for gold' agreement with Saudi Arabia, under which Beijing will pay for Saudi oil in RMB, and Riyadh will convert any trade plus into gold through the Shanghai Gold Exchange (SGE). As per reports, the SGE is building secure vaults in Saudi Arabia to make it easier for the oil-rich Kingdom to convert their trade surplus into gold. Challenge to dollar dominance? While the China-Saudi Arabia deal is undoubtedly a major move on part of Beijing to increase the share of RMB in global trade, which stands at less than 5 percent at present, it is unlikely to cause any significant hit to the US Dollar, which is expected to remain the dominant currency for the foreseeable future, according to economists. Experts believe the Saudi-China agreement will have little impact on the dollar as its use in global trade will decline only if its utility as a medium of exchange, reserve asset and unit of account plummets. Saudi-China deal not a step towards gold standard The agreement to convert trade surplus into gold is also not a novel one, and has been used Central Banks globally for years. These banks have been converting their reserves into gold, and the trend has witnessed a surge in recent years, as per market experts. According to experts, converting currency into gold is not a step towards establishing a gold-standard in the global market because this would require conversion at a fixed exchange rate as one of the pre-requisites. While China's RMB can be converted into gold at market value, this is no way implies that gold will replace the dollar as the medium of payment, they say. Why gold can't replace currency in global trade? Experts also pointed how the elasticity of supply of flat currency gives it a major advantage over physical commodities like gold, as the currency supply can be moderated via fiscal and monetary policies, as mandated by the liabilities of the government and its regulated institutions. Governments worldwide closely monitor the supply of flat currency, ensuring market prices remain stable and deflation does not occur. Central banks often set a target of about 2 percent for inflation, beyond which the attractiveness of the currency decreases, including its utility in terms of storing value. As an example, if the dollar weakens, the real income of exporting countries who use it as a mode of payment, also goes down, while the purchasing power of their reserves also plumets.
