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☆ Central banks ramp up rates again but the pace slows
▼ + stars: | 2022-12-15 | by ( ) www.reuters.com time to read: +5 min

LONDON, Dec 15 (Reuters) - Central banks in Britain, Norway, Switzerland, the euro zone and the United States have all raised interest rates this week. The central bank raised its forecast for its peak interest rate to 5.5%, up from a previous forecast of 4.1%. Money markets moved after the statement to forecast UK interest rates will top out at around 4.5% in August. Markets anticipate an 80% chance of a 50 bps hike when the Riksbank meets next in February. But market players do not expect any significant change from the world's lone major central bank dove.

☆ BOJ to keep ultra-low rates, hold fire until global outlook clearer
▼ + stars: | 2022-12-15 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

Markets are rife with speculation that the BOJ will adjust its policy when Kuroda's second, five-year term ends in April. CONTENT WITH STATUS QUOAmid uncertainty over the global outlook and pace of Japanese wage rises, the BOJ is content with maintaining the status quo for now, the sources said. The BOJ expects the inflation rate to slow below its target next year because cost pressure will dissipate. Any chance of a BOJ policy adjustment will disappear if the Fed fails to tame inflation without pushing the U.S. economy into deep recession, analysts say. "But the BOJ will probably find it hard to phase out stimulus if the global economy is in bad shape," he said.

☆ Japan's wholesale inflation near steady at 9.3% as commodity prices ease
▼ + stars: | 2022-12-12 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

It was the 21st consecutive month to show an annual rise in wholesale prices. But some goods saw the impact of recent easing of global commodity prices," a BOJ official told a briefing. Petroleum and coal goods prices were up 0.5% in November from a year earlier, slowing from a revised 2.8% gain in October, the data showed. Chemical goods and metal scrap prices also saw moderating price gains, reflecting weakening demand from China, it showed. Global commodity prices and the weakness of the yen, which boosts the cost of imports, have been pushing up Japan's wholesale and consumer inflation - a trend that policymakers worry could hurt Japan's fragile economic recovery.

☆ BOJ policymaker Takata rules out ending yield cap - Nikkei
▼ + stars: | 2022-12-09 | by ( ) www.reuters.com time to read: +1 min

Under YCC, the Bank of Japan (BOJ) sets a -0.1% target for short-term interest rates and caps the 10-year bond yield around 0% to achieve its 2% inflation target in a sustainable manner. Markets are simmering with speculation the BOJ could remove the 10-year yield cap to address the mounting cost of prolonged easing, such as the distortions its huge bond buying is causing in the shape of the yield curve. "Unfortunately, I don't think Japan is in that phase yet," Takata told the Nikkei in an interview published on Saturday, on whether the central bank could ditch YCC. While it wasn't easy to sustainably achieve the BOJ's 2% inflation target, there were some positive signs in corporate capital expenditure and wages, Takata was quoted as saying. Reporting by Leika Kihara; Editing by Daniel WallisOur Standards: The Thomson Reuters Trust Principles.

☆ Investors revive wagers on Bank of Japan policy change
▼ + stars: | 2022-12-08 | by ( Junko Fujita | ) www.reuters.com time to read: +4 min

TOKYO, Dec 8 (Reuters) - Global investors are short-selling Japanese bonds and driving its other market yields higher, reviving bets that the Bank of Japan will need to tweak its ultra-easy monetary policy sooner rather than later. BOJ Governor Haruhiko Kuroda has repeatedly stressed the need to persist with the bank's unique yield-curve-control policy, which makes Japan an outlier among major central banks aggressively tightening policy to combat inflation. Japan swaps vs yieldsKuroda has said policy will not change until the recent cost-push inflation is accompanied by higher growth in wages. "The central bank may tweak its YCC before March. There should be an event weight it doesn’t have at the moment," says Malcolm, while making clear UBS does not expect any policy change for at least another year.

☆ Japan upgrades Q3 GDP as global recession, COVID risks linger
▼ + stars: | 2022-12-08 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

Japan's economy unexpectedly shrank in the third quarter as global recession risks, China's faltering economy, a weak yen and higher import costs hurt consumption and businesses. However, others are bracing for the global economy to tip into a recession next year, dealing a sharp blow to trade-reliant Asian exporters such as Japan. Before annualising, third-quarter GDP was down 0.2% on the previous quarter, compared with the initial contraction estimate of 0.3%. Among key sectors, private consumption, which makes up more than half of Japan's GDP, helped drive growth, though it was revised down. However, a weak yen and hefty import bills, which boost the cost of living, more than offset GDP growth contributors.

☆ Japan business mood up, global slowdown weighs on outlook -poll
▼ + stars: | 2022-12-06 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

Reflecting uncertainty in the outlook, however, the monthly poll, which parallels the Bank of Japan's (BOJ) tankan quarterly survey, found large manufacturers expected business conditions to hold steady in the coming three months, while the service-sector had a worsening outlook. The December sentiment index for large manufacturers stood at +8, up from +2 a month earlier, according to the survey, which was conducted from Nov. 22 to Dec. 2. The service-sector index rose to +25 from the +20 seen in November. For big manufacturers, the Reuters December index value was down 2 points from September, suggesting that the next headline figure from the BOJ tankan index for them will slip a tad. The service-sector index was 14 points higher in December than three months earlier.

☆ Gold will hit $3,000 an ounce and the dollar will surge 50% against the Japanese yen. Here are the 10 outrageous 2023 predictions from one European bank
▼ + stars: | 2022-12-06 | by ( Carla Mozée | ) www.businessinsider.com time to read: +7 min

Gold surging to $3,000 an ounce is part of Saxo Bank's list of 10 Outrageous Predictions for 2023. The Danish bank's annual list also foresees Japan setting a floor of 200 yen to temporarily halt a surging US dollar. Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. Saxo predicted 2023 as the year the market discovers that inflation will continue to burn hot for the foreseeable future, driving gold to $3,000 an ounce. "Under-owned gold rips higher on the sea-change reset in forward real interest rate implications of this new backdrop, it said.

With inflation expectations already "sufficiently" high, core consumer inflation could exceed the BOJ's 2% target next fiscal year, and open scope for the central bank to abandon its 0% target for the 10-year bond yield, Hoshi said. The BOJ must start worrying about the possibility of inflation accelerating more than expected." A member of various government committees and an expert on macroeconomic policy, Hoshi spoke as a panelist at the BOJ's workshop on Nov. 25 that discussed Japan's wage dynamics. Under yield curve control (YCC), the BOJ guides short-term interest rates at -0.1% and pledges to guide the 10-year bond yield around 0%. If the BOJ were to normalise monetary policy, it will do so in several stages starting with the removal of the 10-year yield target that is distorting the shape of the yield curve, he said.

☆ BOJ's Wakatabe warns risk of 'Japanification' not gone yet
▼ + stars: | 2022-12-04 | by ( ) www.reuters.com time to read: +2 min

TOKYO, Dec 4 (Reuters) - Even as cost-push factors boost inflation, global central banks must be vigilant to the risk of "Japanification", in which their economies face prolonged low inflation and stagnation, said Bank of Japan (BOJ) Deputy Governor Masazumi Wakatabe. Various structural factors could weigh on the neutral rate, or the rate at which monetary policy is neither stimulating nor restricting growth, across the globe, he said. "What Japan's long experience with deflation shows is that it's quite hard to eradicate fears of deflation," said Wakatabe, who is known as a vocal advocate of aggressive monetary easing. It continues to maintain ultra-low rates, even as rising raw material costs push inflation above the target. Wakatabe, whose five-year term as deputy governor ends in March, has consistently stressed the need to keep monetary policy ultra-loose to put a sustained end to deflation.

But she warned the outlook was "exceptionally" uncertain and dominated by risks, such as the fallout from Russia's war in Ukraine, global financial tightening and a slowdown in China's growth. But we need to rebuild and preserve buffers and be prepared to fully use our policy tool-kit," she told the same forum. The fallout from China's slowdown has been particularly painful in Asia, where factory activity slumped across the region in November. At the forum, Bank of Japan Governor Haruhiko Kuroda said he did not see a significant risk of Asia facing a sudden loss of confidence or a renewed financial crisis. "ASEAN policymakers must be vigilant" to risks and offer "clear, sufficient and timely communication to avoid unintended outcomes," he said.

☆ Marketmind: Stop making sense
▼ + stars: | 2022-12-01 | by ( ) www.reuters.com time to read: +2 min

[1/4] The Federal Reserve building is seen in Washington, U.S., January 26, 2022. "It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down," Powell said. Perhaps not, but markets are moving ahead with an assumption we're nearly there. European futures indicate stocks in the region will spike higher, tracking Asian equities, which were tracking Wall Street. "To promote wage growth, the BOJ needs to patiently maintain its current monetary easing."

☆ BOJ flags broadening price increases in once deflation-prone Japan
▼ + stars: | 2022-11-30 | by ( ) www.reuters.com time to read: +2 min

TOKYO, Nov 30 (Reuters) - A wider range of Japanese companies are raising prices, including those in sectors historically reluctant to pass on higher costs to customers, a Bank of Japan research note said on Wednesday in a nod to broadening inflationary pressure. A thorough analysis of the BOJ's "tankan" quarterly business survey showed price increases were spreading to many industries, including electronic goods retailers and drug stores, which are known for luring customers with big discounts, the note said. Some companies that raised prices did so for the first time in 30 years after a sharp rise in raw material costs, the research note said. "Hearings conducted on companies showed that when a firm with a big market share in the industry raises prices, others tended to follow suit," the research note said. Japan has been mired in decades of deflation and low inflation as many companies avoided raising prices for fear of scaring away cost-sensitive consumers.

☆ BOJ's next move will unwind loose policy, 92% of economists say
▼ + stars: | 2022-11-29 | by ( Kantaro Komiya | ) www.reuters.com time to read: +4 min

Twenty-four of 26 economists in the Nov 15-25 poll said the BOJ's next action, if any, would be "unwinding its ultra-easy monetary policy". Widely known as the policy accord, it requires the central bank to achieve its 2% inflation target "at the earliest date possible." Among those who wanted a revision, seven called for more flexibly judging achievement of the inflation target. One BOJ watcher calling for change wanted a lower inflation target, and another said the BOJ's mandate should be enlarged to include targeting employment or wage rises. On Monday, Prime Minister Fumio Kishida rejected the idea of adding wage growth as a new monetary policy goal.

☆ BOJ's next move will unwind loose policy, 92% of economists say: Reuters Poll
▼ + stars: | 2022-11-29 | by ( Kantaro Komiya | ) www.reuters.com time to read: +4 min

Twenty-four of 26 economists in the Nov 15-25 poll said the BOJ's next action, if any, would be "unwinding its ultra-easy monetary policy". Widely known as the policy accord, it requires the central bank to achieve its 2% inflation target "at the earliest date possible." Among those who wanted a revision, seven called for more flexibly judging achievement of the inflation target. One BOJ watcher calling for change wanted a lower inflation target, and another said the BOJ's mandate should be enlarged to include targeting employment or wage rises. Two economists in the poll said the accord should simply be abolished.

Summary Climate change has big impact on economy, inflation - AmamiyaAug survey showed strong demand for green bonds - BOJ AmamiyaBOJ's climate scheme has extended $26 bln in loansTOKYO, Nov 27 (Reuters) - Bank of Japan (BOJ) Deputy Governor Masayoshi Amamiya said on Sunday the central bank will conduct a survey annually of financial institutions and companies, seeking ways to nurture the country's growing climate finance market. An initial survey in August showed "strong demand" in Japan for "green" bonds and other environmental, social and governance (ESG) debt instruments, Amamiya said. Some respondents said they faced challenges in obtaining information and appropriate methods for assessing risks associated with climate change, he said. "Central banks can therefore contribute to achieving macroeconomic stability in the long run by supporting private-sector moves to deal with climate change." The BOJ last year rolled out a funding scheme targeting activities aimed at combating climate change, as part of efforts to align itself with a global push toward a greener society.

Emerging economies started hiking before the Fed, and quickly, partly because their currencies had weakened against the dollar, raising funding costs and importing inflation. That had quickly fed through to prices, especially energy and some food commodities that are generally traded in dollars. "Total reserves in the emerging markets had fallen by over $400 billion, down 7%, this year as of September." ECB & BOJAt the ECB, the Fed's signal bolsters an already strong case for more measured rate hikes after back-to-back 75 basis point moves and eases growth concerns. Slower Fed rate hikes also help the Bank of Japan, whose ultra-low rates have been criticised for fuelling a sharp yen decline that inflates the cost of imports.

Summary Tokyo Nov core CPI up 3.5% vs f'cast +3.4%Tokyo CPI stays above BOJ's 2% target for 6 straight monthsData underscores broadening inflationary pressureTOKYO, Nov 25 (Reuters) - Core consumer prices in Japan's capital, considered a leading indicator of nationwide trends, rose 3.6% in November from a year earlier, marking the fastest annual pace in 40 years in a sign of broadening inflationary pressure. The rise in the Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel costs, exceeded a median market forecast for a 3.5% gain and accelerated from a 3.4% increase in October, government data showed on Friday. Core consumer inflation in Tokyo remained above the Bank of Japan's 2% target for six straight months in November, a sign that rising raw material costs were steadily pushing up a broad range of prices for daily necessities. The Tokyo core-core CPI index, which strips away both fresh food and fuel costs, rose 2.5% in November from a year earlier, pacing up from a 2.2% gain in October. Reporting by Takahiko Wada and Leika Kihara Editing by Chang-Ran Kim and Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

REUTERS/Richard Carson/File PhotoLONDON, Nov 23 (Reuters) - You can sometimes buck the market - for a time at least. Even mention government or central bank intervention in financial markets to many professionals and you elicit a tirade on such futility against forces beyond control. Against that, this year was marked by three very different examples of direct financial market intervention that appear to have succeeded in their narrow and targetted goals at least - despite many doubts whether they would or even could work. And it was at least in some part due to the SPR intervention, even if that was aided by central bank tightening and slowing world demand. All three examples of market intervention had their own dynamics and drivers.

☆ BOJ to conduct digital yen trial with Japan's 3 megabanks, others - Nikkei
▼ + stars: | 2022-11-23 | by ( Daniel Leussink | ) www.reuters.com time to read: +1 min

REUTERS/Florence Lo/IllustrationTOKYO, Nov 23 (Reuters) - The Bank of Japan will start a trial with an eye on launching a digital yen with Japan's three megabanks and regional banks next spring, the Nikkei newspaper reported. The central bank could decide in 2026 whether to issue a digital currency after verifying issues for two years, such as whether there are problems with deposits and withdrawals from bank accounts, Nikkei said. A spokesperson for the BOJ was not immediately available to comment on Wednesday, a public holiday in Japan. It will likely come after the BOJ wraps up a second phase of its central bank digital currency (CBDC) experiment that started in April, and which will last about a year. The BOJ will collaborate with participating banks in the trial from next spring to check whether CBDCs can be transferred between accounts, the Nikkei reported.

TOKYO, Nov 22 (Reuters) - Japan's weighted median inflation rate, which is closely watched as an indicator on whether price rises are broadening, hit a record 1.1% in October in a sign of heightening inflationary pressure from rising raw material and labour costs. The 1.1% year-on-year rise in the weighted median inflation was the fastest pace on record and followed a 0.5% increase in September, BOJ data showed on Tuesday. Japan's weighted median inflation rate hovered around zero for the past two decades, as firms held off on price hikes for fear of scaring away cost-sensitive consumers. Unlike the consumer price index (CPI) which is swayed by fuel and energy costs, the weighted median inflation rate is useful to trace how broadly prices are rising. In a research note published in 2015, the BOJ said the weighted median inflation rate would rise more only if inflation expectations heighten, and people begin to assume that prices will continue to rise sustainably.

☆ Dollar edges higher as China COVID worries spur defensive buying
▼ + stars: | 2022-11-21 | by ( ) www.reuters.com time to read: +2 min

SINGAPORE, Nov 21 (Reuters) - The U.S. dollar started the week on the front foot, boosted by defensive buying as investors remained on edge following a spike in COVID-19 cases in some cities in China that prompted officials to tighten restrictions. Hawkish comments from the Federal Reserve officials have helped the safe-haven dollar stabilise after its sharp dive earlier in November. Meanwhile, cryptocurrencies remained under pressure, with bitcoin down 0.3% to $16,205.00, while Ether also shed 0.3%. The Japanese yen weakened 0.04% versus the greenback at 140.42 per dollar. The Australian dollar fell 0.25% versus the greenback at $0.665, while the kiwi was down 0.21% at $0.614.

☆ Dollar on track for weekly gain as Fed pushes back on pivot
▼ + stars: | 2022-11-18 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

The dollar rose modestly on the yen following Bullard's comments and is up about 1.2% for the week to 140.36 yen . It also rose 0.9% on the Australian dollar overnight to $0.6690 per Aussie, and is on course for its first weekly gain on the Aussie since mid-October. Fed funds futures pricing currently implies a peak rate just below 5% and for rates to start falling by late 2023. Earlier this week, stronger-than-expected retail sales data had also shaken hopes for a pause in hikes, since it seemed to suggest consumers remained in spending mode. Later on Friday, British retail sales data is due, and European Central Bank President Christine Lagarde is among a smattering of policymakers due to speak.

read moreTwo-year yields crept back up to 4.46%, retracing a little of last week's sharp inflation-driven drop of 33 basis points to a low of 4.29%. The bond market's warnings of recession were not what Wall Street wanted to hear, and they left S&P 500 futures flat on Friday, while Nasdaq futures inched up 0.1%. EUROSTOXX 50 futures added 0.7% and FTSE futures 0.3%. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) bounced 0.6%, after slipping for two sessions. The dollar edged up to 140.20 yen and away from its recent low of 137.67, but faced resistance around 140.70/80.

☆ Dollar steadies as U.S. spending points to rate hikes
▼ + stars: | 2022-11-17 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

The Australian and New Zealand dollars fell slightly overnight, in response to the U.S. data, and were steady in morning trade on Thursday. The Japanese yen hovered at 139.25 per dollar, while the Chinese yuan nursed losses at 7.1033 per dollar after China's central bank promised to keep local liquidity ample and to guide commercial loan growth. The Aussie dollar didn't catch much of an immediate boost from stronger-than-expected jobs data. Comments from a number of Fed and other central bank officials will also be closely watched. Indonesia's central bank meets to set policy and a 50 basis point hike is expected.

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