Posts Tagged: bank of japan

 

No change in policy from the Bank of Japan

  • Revises up assessment for exports
  • Revises up assessment of factory output
  • Consumer inflation likely to slow for time being reflecting oil price falls
  • Core consumer inflation, when excluding effect of last year’s sales tax hike, moving around 0.5 pct
  • Private consumption has remained resilient but recovery in some areas has been sluggish
  • Japan’s economy likely to continue recovering moderately as a trend
  • Keeps monetary policy steady, pledges to increase monetary base at annual pace of 80 trln yen
  • Policy decision was made by 8-1 vote
  • BOJ board member Kiuchi votes against keeping policy steady, says policy before October 31 easing was appropriate
  • Kiuchi proposed making 2 pct inflation target a medium- to long-term goal, which was turned down by 8-1 vote
 

Minutes from the Bank of Japan December 18/19 meeting … looks like pretty stadard stuff from the:

  •  Japan economy has continued to recover moderately
  • BOJ to keep easing until 2% inflation stable

Full text

–Developments have rendered these Minutes perhaps a little redundant

–More (via Reuters):

  • Members shared recognition global markets had shown some nervousness
  • Some members said while oil price falls had positive effect on global economy, it could risk destabilising markets
  • Some members said political turmoil in Greece might have adverse effects on euro-area economy
  • Some members said oil price falls would support economic activity through rises in corporate profits, households’ real income
  • One member said there might be growing tendency among firms to postpone capex plans
  • Some members said various surveys showed business sentiment had turned cautious
  • Many members said relatively weak developments had been recently observed in consumer sentiment surveys
  • Many members said oil price falls were likely to exert downward pressure on CPI for time being
  • Many members said oil price falls would have positive effect on economy, push up prices long-term
 

Over the weekend, we asked rhetorically whether “The BoJ is The Next SNB?” after one BOJ official was overheard warning that “we have caused tremendous trouble for the financial industry,” and many others growing anxious about continuing its massive purchases of government bonds and pressure from the financial industry is strengthening by the day “to scale back monetary easing soon.” Overnight, it was none other than Goldman who reiterated precisely what we said, however when looking at the BOJ from the “other” angle - that of the central bank not doing enough to convince markets it will do everything in its power, i.e., print, until inflation is a “stable” 2%.

Here is Goldman’s Naohiko Baba with why the BOJ at risk of losing credibility over its price commitment” 

The Bank of Japan (BOJ) kept its monetary policy unchanged, as we expected, at the Monetary Policy Meeting on January 20-21. Two noteworthy points from Governor Kuroda’s subsequent press conference were as follows:

 

1. The BOJ released its interim assessment of the October Outlook Report at the MPM, and sharply lowered its core CPI outlook – for FY2014 to +0.9% from +1.2%, and for FY2015 to +1.0% from +1.7% – reflecting the recent slide in crude oil prices. However, the BOJ maintains its view that its 2% price stability target is likely to be achieved by around FY2015.

 

2. The MPM did not discuss lowering the 10 bp interest rate on excess bank reserves, despite heightened expectations among foreign investors in particular ahead of the meeting.

 

>> Read More

 

And the hits just keep on coming.

A few days after the SNB shocked the world when it became the first central bank to pull out of its currency war with the ECB, leading to an epic defeat not only for the Swiss economy whose exports are now set to crash and various brokers and macro hedge funds who were short the Swissy (even as the SNB is nursing an epic balance sheet as as result of its failed 3+ year intervention), and following the latest Chinese snub of its overzealous stock gamblers, next up on the “shock and awe” bandwagon may be none other than the Bank of Japan (something we noted over the weekend in “Is The BoJ The Next SNB?”), where according to Reuters, any hopes for even more QE may be dashed after a ruling party lawmaker and one of the architects of Prime Minister Shinzo Abe’s “Abenomics” policies said that the Bank of Japan “does not need to ease monetary policy further this year unless the economy is hit by a severe external shock.”

As a reminder, it was just hours after the Fed’s QE ended on October 31, when the BOJ shocked markets with expanding its own QE even further, sending the USDJPY soaring above 120. The problem is that with the Nikkei tracking the USDJPY tick for tick, implying all risk gains come at the expense of currency losses, last Firday the Nikkei had fully roundtripped to the level seen just after the announcement, suggesting any further gains would require even more easing. Easing, which will not come unless Japan’s economy, already in freefall, literally implodes.  >> Read More

 

Reuters Tankan results out:

  • Japan manufacturers index +10 in December vs +13 in November, unchanged from September
  • Non-manufacturers index +23 in December vs +18 in November, up 1 point from September
  • Manufacturers March index seen at +7, non-manufacturers +24

There is a Bank of Japan Tankan Survey and a Reuters Tankan Survey.

Both are surveys of manufacturing and service companies designed to assess business conditions in Japan.

The BOJ Tankan is conducted quarterly, the Reuters Tankan is monthly.

 

The two-day Bank of Japan (BOJ) monetary policy board meeting has concluded, with the announcement out now.

  • Keeps plan for 80tln yen annual rise in monetary base
  • BOJ’s policy decision was made by 8-1 vote
  • Board member Kiuchi voted against decision to keep monetary policy steady
  • Kiuchi opposed decision because he felt previous monetary policy steps were appropriate
  • Kiuchi proposed making 2 pct inflation target a medium- to long-term goal, which was turned down by 8-1 vote
  • Japan’s economy making some weak movements mainly on output but continues to recover moderately as a trend
  • BOJ raises assessment on exports
  • Japan CPI likely to hover around current positive levels for time being
  • Output remains somewhat weak
  • Capex in gradual uptrend as corporate profits improve
  • Impact of sales tax hike on consumption subsiding as a whole
  • Housing investment appears to be bottoming out

Quick headlines via Reuters

Full statement

 

Deflation is becoming lodged in all the economic strongholds of East Asia. It is happening faster and going deeper than almost anybody expected just months ago, and is likely to find its way to Europe through currency warfare in short order.

Factory gate prices are falling in China, Korea, Thailand, the Philippines, Taiwan and Singapore. Some 82pc of the items in the producer price basket are deflating in China. The figures is 90pc in Thailand, and 97pc in Singapore. These include machinery, telecommunications, and electrical equipment, as well as commodities.

Chetan Ahya from Morgan Stanley says deflationary forces are “getting entrenched” across much of Asia. This risks a “rapid worsening of the debt dynamic” for a string of countries that allowed their debt ratios to reach record highs during the era of Fed largesse. Debt levels for the region as a whole (ex-Japan) have jumped from 147pc to 207pc of GDP in six years.

These countries face a Sisyphean Task. They are trying to deleverage, but the slowdown in nominal GDP caused by falling inflation is always one step ahead of them. “Debt to GDP has risen despite these efforts,” he said. If this sounds familiar, it should be. It is exactly what is happening in Italy, France, the Netherlands, and much of the eurozone.

>> Read More

 

Haruhiko Kuroda, governor of the Bank of Japan, sometimes asks close aides how he will be remembered. The central bank chief is well aware of the enormity of the challenge he is tackling.

     The BOJ governor took the helm in March last year and soon after unleashed an unprecedented easing program that aimed to push inflation to 2% within two years.

     If he manages to pull this off, and end the easing incident-free, Kuroda believes he will deserve the title of “great central banker.” The challenge is formidable: Japan’s growth potential is declining due to a confluence of factors, most importantly the shrinking population.

     Short-term government bills, or T-bills, in recent days have been posting negative yields. That means investors are paying more money than they can expect to earn when the bills mature. In effect, they are paying simply to hold these securities. >> Read More

 

Nothing new here, says the Bank of Japan.

The Bank of Japan reiterated its stance in its monthly update on monetary policy, saying that the Japanese economy is continuing to “recover moderately as a trend,” although it acknowledged that the country’s recent sales tax hike was having some effect on production.

The BOJ said that there was “some weakness particularly on the production side….due mainly to the effects of the subsequent decline in demand following the front-loaded increase prior to the consumption tax hike.”

Japan raised its sales tax for the first time in seventeen years in April, from 5 to 8 per cent, meaning people rushed out to buy cars, furniture and expensive items before it was implemented.

Otherwise, the BOJ added that private consumption “has remained resilient as a trend.” It maintained its 2 per cent inflation target.

 

The Bank of Japan have concluded their two-day monetary policy meeting with no change to policy, as expected.

  • BOJ keeps monetary policy steady by unanimous vote
  • Pledges to increase monetary base at annual pace of 60-70 trln yen
  • The board turns down by 8-1 vote proposal by Kiuchi to make 2%t inflation target a medium- to long-term goal
  • Says economy continues to recover moderately as a trend, keeps assessment unchanged
  • Revises up assessment on overseas economies
  • Says overseas economies are recovering although lacklustre performance still seen in some areas
  • Says industrial output continues to rise moderately as a trend

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Full text

Next up from the BOJ will be Kuroda’s press conference at 0600GMT

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Technically Yours,
Team ASR,
Baroda, India.