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☆ BOJ's Noguchi: Japan yet to achieve wage-driven rise in inflation
▼ + stars: | 2023-12-02 | by ( ) www.reuters.com time to read: +1 min

Japanese national flag is hoisted atop the headquarters of Bank of Japan in Tokyo, Japan September 20, 2023. "It's true the impact of elevated global inflation is reaching Japan's economy with consumer inflation exceeding the BOJ's 2% target since the spring of 2022," Noguchi said, according to the text of his speech posted on the BOJ's website. "But the rise (in inflation) is mostly due to cost-push factors amid higher import prices," contrary to the wage-driven price increases seen in the United States and Europe, he said. "To achieve our 2% inflation target, we must see price rises backed by sustained wage increases," Noguchi said. With inflation exceeding the BOJ's 2% target for more than a year, market expectations are heightening that the central bank will exit ultra-loose monetary policy next year.

Persons: Issei Kato, Asahi Noguchi, Noguchi, we've, Kazuo Ueda, Leika, Jonathan Oatis Organizations: Bank of Japan, REUTERS, Rights, Thomson Locations: Tokyo, Japan, United States, Europe

☆ Asia factory activity weakens, uncertainty on China clouds outlook
▼ + stars: | 2023-12-01 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

An employee works on a production line manufacturing steel structures at a factory in Huzhou, Zhejiang province, China May 17, 2020. The data shows that factories are producing less and hiring fewer people," Dan Wang, chief economist at Hang Seng Bank China, said of China's PMI readings, which have different samples. Export-reliant Japan, South Korea and Taiwan bore the brunt of sluggish global demand with their manufacturing activity remaining stagnant in November, surveys showed. Japan's final au Jibun Bank manufacturing PMI fell to 48.3 in November from 48.7 in October, shrinking at the fastest pace in nine months. Manufacturing activity also shrank in Taiwan, Vietnam and Malaysia, but expanded in Indonesia and the Philippines, the surveys showed.

Persons: Dan Wang, Toru Nishihama, Leika Kihara, Jamie Freed Organizations: REUTERS, PMI, Korea Soft, P Global, Hang Seng Bank, Dai, Research, Jibun Bank, Research Institute, Thomson Locations: Huzhou, Zhejiang province, China, Japan, S, TOKYO, Europe, United States, Hang Seng Bank China, South Korea, Taiwan, Asia, Vietnam, Malaysia, Indonesia, Philippines

Adachi said Japan has yet to see a positive wage-inflation cycle, in which wages and inflation rise together, kick off. The BOJ can start debating an exit strategy only when the chance of such a cycle emerging heightens, he added. But Adachi said the BOJ did not necessarily need to wait until inflation-adjusted wage growth turns positive for it to normalise monetary policy. Hawkish member Naoki Tamura in August signalled a chance of ending negative rates early next year, saying Japan's inflation was already "clearly in sight" of the BOJ's target. With inflation exceeding its 2% target for more than a year, many market players expect the BOJ to end negative rates and YCC next year, with some betting on a move as early as January.

Persons: Issei Kato, Seiji Adachi, Adachi, we're, Naoki Tamura, YCC, Leika Kihara, Takahiko Wada, Chang, Ran Kim, Jamie Freed Organizations: Bank of Japan, REUTERS, Thomson Locations: Tokyo, Japan, TOKYO, MATSUYAMA, Matsuyama

☆ Japan's price trend gauge hits record, heightens case for BOJ exit
▼ + stars: | 2023-11-28 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

The 2.2% year-on-year increase in the weighted median inflation rate, which is closely watched as an indicator on whether price rises are broadening, followed a 2.0% gain in September. It was the fastest rise since comparable data became available in 2001, Bank of Japan (BOJ) data showed. The data will be among the factors the BOJ will scrutinise at its next policy-setting meeting on Dec. 18-19. The weighted median is the inflation rate of items at the middle of the price changes, or around the 50th percentile point of the distribution. Unlike the consumer price index (CPI), which is swayed by fuel and energy costs, the weighted median inflation rate is useful to trace how widely prices are rising.

Persons: Issei Kato, Kazuo Ueda, Leika Kihara, Kim Coghill Organizations: Bank of Japan, REUTERS, Rights, Thomson Locations: Tokyo, Japan, Bank

☆ Japan business lobby to discuss negative impact of weak yen -Yomiuri
▼ + stars: | 2023-11-28 | by ( ) www.reuters.com time to read: +1 min

FILE PHOTO:Coins and banknotes of Japanese yen are seen in this illustration picture taken June 16, 2022. REUTERS/Florence Lo/Illustration/ File Photo Acquire Licensing RightsTOKYO, Nov 28 (Reuters) - Japan's top business lobby Keidanren will discuss at next month's executive meeting the potential negative impact of the yen's weakness on the economy, the Yomiuri newspaper reported on Tuesday. Keidanren, which is comprised of major companies including big automakers and electronics firms, traditionally favoured a weak yen and have called on the government to stave off sharp yen rises that make Japan's exports less competitive overseas. Any discussion on the demerits of a weak yen by Keidanren would highlight a shift in how Japan's business sector views the currency's movement and its impact on the economy. The shift in Keidanren's stance could heighten calls by the business sector for the Bank of Japan to end ultra-low interest rates that have been blamed for accelerating the yen's decline, the newspaper said.

Persons: Florence Lo, Keidanren, Leika Kihara, Christopher Cushing Organizations: REUTERS, Rights, Yomiuri, Bank of Japan, Reuters, Thomson

☆ BOJ's Ueda: Cannot say with conviction inflation will hit 2% target sustainably
▼ + stars: | 2023-11-27 | by ( ) www.reuters.com time to read: 1 min

Bank of Japan (BOJ) Governor Kazuo Ueda attends a news conference after their policy meeting at BOJ headquarters in Tokyo, Japan April 28, 2023. REUTERS/Issei Kato/File Photo Acquire Licensing RightsTOKYO, Nov 27 (Reuters) - Bank of Japan Governor Kazuo Ueda said on Monday the central bank cannot say yet with conviction that inflation will sustainably and stably achieve its 2% inflation target. "We're seeing some positive signs in wages and inflation. But there's high uncertainty on whether this cycle will strengthen," Ueda told parliament. Reporting by Leika Kihara; Editing by Tom HogueOur Standards: The Thomson Reuters Trust Principles.

Persons: Kazuo Ueda, Issei Kato, Ueda, Leika Kihara, Tom Hogue Organizations: of Japan, REUTERS, Rights, Bank of Japan, Thomson Locations: Tokyo, Japan

☆ Japan's corporate service inflation climbs in sign of broadening price pressures
▼ + stars: | 2023-11-27 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

TOKYO, Nov 27 (Reuters) - Japan's business-to-business service inflation accelerated in October as a tight job market lifted labour costs, underscoring a broadening of price pressures that could heighten the chance of a near-term end to ultra-loose monetary policy. The services producer price index, which measures the price companies charge each other for services, rose 2.3% in October from a year earlier, up from a revised 2.0% gain in September, Bank of Japan (BOJ) data showed on Monday. Information and communication, machinery repair and worker dispatching businesses saw fees increase from year-earlier levels due to higher labour costs. The data suggest Japan's economy is making progress towards achieving sustained rises in inflation accompanied by solid wage growth. His remarks have heightened market attention to developments in services prices, which most vividly reflect wages pressures companies face in their businesses.

Persons: Kazuo Ueda, Leika Kihara, Lisa Shumaker, Edwina Gibbs Organizations: Bank of Japan, Reuters, Thomson Locations: TOKYO

"Given the fast-changing landscape, I believe those who move fast (with wage hikes) should become competitive." A demand made this year by Rengo, Japan's largest trade union confederation, for pay hikes of "around 5%" resulted in average wage hikes of 3.58% among major companies. Six out of 10 economists in a Reuters poll expect major firms' pay hikes in 2024 to exceed this year's. The key, however, would be whether wage hikes broaden to smaller firms and those in the regional areas. A report by the BOJ's regional branch managers in October warned wage hikes remained uneven among sectors with many firms undecided on next year's pay increments.

Persons: Kim Kyung, Takeshi Niinami, Fumio, Kazuo Ueda, Hisashi Yamada, Rengo, Atsushi Takeda, Kishida, Keita Kondo, Tetsushi Kajimoto, Kentaro Sugiyama, Sam Holmes, Leika Organizations: REUTERS, Rights, Suntory Holdings Ltd, Reuters, Meiji, Life Insurance, Suntory Holdings, Bank, Japan, Hosei University, OECD, UA Zensen, Itochu Economic Research Institute, Thomson Locations: Tokyo, Japan, Ukraine, Saitama

☆ BOJ will debate easy-policy exit when inflation nears target -Gov Ueda
▼ + stars: | 2023-11-17 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Bank of Japan (BOJ) Governor Kazuo Ueda attends a news conference after their policy meeting at BOJ headquarters in Tokyo, Japan April 28, 2023. The fate of the central bank's purchases and holdings of exchange-traded funds (ETF) will also be discussed as and when the BOJ considers an exit from ultra-loose policy, he added. "We will consider ending yield curve control and negative interest rates if we can expect inflation to stably and sustainably meet our 2% target," Ueda told a semi-annual testimony to parliament on Friday. "Trend inflation is likely to gradually accelerate toward our 2% inflation target through fiscal 2025. "If achievement of our price target approaches, we will discuss a strategy and guidelines for exiting ultra-loose policy," including the fate of its ETF holdings, Ueda said.

Persons: Kazuo Ueda, Issei Kato, Ueda, Leika, Shri Navaratnam, Sam Holmes Organizations: of Japan, REUTERS, Bank of Japan, Thomson Locations: Tokyo, Japan, TOKYO

☆ BOJ's hawkish rhetoric signals chance negative rates may end soon
▼ + stars: | 2023-11-15 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

Having watered down YCC at its last policy meeting, the BOJ's next goal is to pull short-term rates out of negative territory early next year, sources have told Reuters. That leaves open the chance of an policy change in January, when the BOJ next reviews its quarterly price forecasts. Most expect an end to both YCC and negative rates. "It's an awfully big upgrade and shows how the BOJ had made estimates that were way too low," said former BOJ top economist Hideo Hayakawa, who expects negative rates to end in April. Even if it ends negative rates, nominal short-term borrowing costs will remain well below levels that neither stimulate nor cool the economy - estimated by analysts to stand somewhere near 2%.

Persons: Issei Kato, Ueda, Kazuo Ueda's, Haruhiko Kuroda, Kuroda, Mari Iwashita, Hideo Hayakawa, Takahide, Leika Kihara, Takahiko Wada, Sam Holmes Organizations: Bank of Japan, REUTERS, Daiwa Securities, Japan Center for Economic Research, Thomson Locations: Tokyo, Japan, TOKYO, U.S

"Given the absence of a growth engine, it wouldn't surprise me if the Japanese economy contracted again in the current quarter. The risk of Japan falling into recession cannot be ruled out," said Takeshi Minami, chief economist at Norinchukin Research Institute. "The weak growth and the spectre of slowing inflation could delay the BOJ's exit from negative interest rates," he said. Japan’s economy contracts in the third quarterThe weak reading reflects lacklustre consumption and capital expenditure, dashing policymakers' hopes for a post-pandemic rebound in domestic activity to offset weaker external demand from China and elsewhere. He said better net exports, underpinned by car shipments and tourism, helped lift growth in the second quarter, belying the weakness in domestic demand.

Persons: Androniki, Takeshi Minami, Stefan Angrick, Angrick, Fumio Kishida, Tetsushi Kajimoto, Sam Holmes Organizations: REUTERS, Norinchukin Research, Gross, Moody's, Thomson Locations: Tokyo, Japan, TOKYO, China

☆ Japan's Oct wholesale inflation slows sharply, signals waning cost pressures
▼ + stars: | 2023-11-13 | by ( Leika Kihara | ) www.reuters.com time to read: +1 min

A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. REUTERS/Androniki Christodoulou/File Photo Acquire Licensing RightsTOKYO, Nov 13 (Reuters) - Japanese wholesale inflation slowed sharply October year-on-year, data showed on Monday, a sign that cost-push pressures that had been driving up prices for a wide range of goods were starting to fade. The slowdown was due to declines in prices for wood, chemical and steel products, the data showed, highlighting the impact of falling global commodity costs. The spike in wholesale inflation has prodded many Japanese firms to pass on higher costs to households, a trend that led the Bank of Japan to upgrade its inflation forecasts in quarterly projections released in October. But the BOJ has said the recent cost-push inflation must be replaced by price rises driven more by robust domestic demand, and accompanied by wage growth, in order for it to consider ending ultra-low interest rates.

Persons: Androniki, Leika, Shri Navaratnam Organizations: REUTERS, Rights, Bank of Japan, Thomson Locations: Tokyo, Japan

The central bank could revise up its price forecasts again in January, which would allow policymakers to justify pulling short-term interest rates out of negative territory, he said. "There's a chance the BOJ could end negative rates as early as January next year, if it judges that inflationary pressure is heightening," Maeda told Reuters in an interview on Wednesday. It also applies a charge to a pool of excess reserves to guide short-term rates at -0.1% under its negative-rate policy. Before adopting negative rates and YCC in 2016, the BOJ was pushing down long-term rates solely with a huge asset-buying programme called "quantitative and qualitative easing" (QQE). "After ending negative rates, the BOJ's policy would look quite similar to when it just had QQE," Maeda said.

Persons: Issei Kato, Eiji Maeda, Maeda, There's, BOJ, Leika Kihara, Gerry Doyle Organizations: Bank of Japan, REUTERS, Rights, Bank of, Reuters, Chibagin Research, Thomson Locations: Tokyo, Japan, Bank of Japan

☆ BOJ debated groundwork for future easy-policy exit at Oct meeting
▼ + stars: | 2023-11-09 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Staff members of Bank of Japan walk between the BOJ headquarters buildings in Tokyo, Japan September 20, 2023. The discussions highlight how the BOJ is looking to exit its decade-long accommodative regime, as prospects of sustained inflation and wage growth heighten. At the Oct. 30-31 meeting, the BOJ kept its ultra-low interest rate targets unchanged but tweaked the yield curve control (YCC) to loosen its grip on long-term interest rates. Another opinion showed how one board member saw prospects of sustainably achieving the BOJ's price target having heightened further since the previous meeting in July. The summary does not disclose the identity of the board member who made the comments.

Persons: Issei Kato, Kazuo Ueda, Leika, Shri Navaratnam, Sam Holmes Organizations: Bank of Japan, REUTERS, Bank, Japan, Thomson Locations: Tokyo, Japan, TOKYO

☆ BOJ Ueda signals chance of exit from easy policy before real wages rise
▼ + stars: | 2023-11-08 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Bank of Japan (BOJ) Governor Kazuo Ueda attends a news conference after their policy meeting at BOJ headquarters in Tokyo, Japan April 28, 2023. "Real wages would likely have turned positive when a positive wage-inflation cycle kicks off," Ueda said. "But in terms of how long we maintain our massive monetary easing ... real wages don't necessarily have to turn positive before that decision is made," he said. "The decision (of ending ultra-loose policy) could be made if we can foresee with some certainty that real wages will turn positive ahead," Ueda told parliament. Ueda said the pass-through of rising import prices must dissipate and that wages and inflation needed to rise in tandem for the BOJ to consider exiting ultra-easy policy.

Persons: Kazuo Ueda, Issei Kato, BOJ Ueda, Ueda, YCC, Leika Kihara, Lincoln, Sam Holmes Organizations: of Japan, REUTERS, Bank of Japan, ., Thomson Locations: Tokyo, Japan, TOKYO

☆ Exclusive: BOJ plans to exit from easy policy next year but needs some good fortune
▼ + stars: | 2023-11-02 | by ( Leika Kihara | ) www.reuters.com time to read: +6 min

Ueda's intentions are based on interviews with six sources familiar with the BOJ's thinking, including government officials with direct interaction with the bank. "Given uncertainty over the economic outlook, the BOJ probably wants to wait at least until spring next year in normalising policy," said another source. If the yen continues to fall, that could heighten political pressure on the BOJ to exit sooner than it wants, some analysts say. The risk of sharp yen falls and an inflation overshoot may leave the BOJ with less time than it wants to exit. "The BOJ doesn't have much time left, a point governor Ueda is probably mindful of."

Persons: Kazuo Ueda, Ueda, Kuroda, it's, Robert Samson, Ueda hasn't, Hiromi Yamaoka, Leika Kihara, Anisha, Shri Navaratnam Organizations: Japan, Kyodo, REUTERS, Bank of Japan, Nikko Asset Management, Thomson Locations: Tokyo, Japan, BOJ, YCC, TOKYO, U.S, Bengaluru

☆ Japan's Kishida announces $113-bln package to combat inflation pain
▼ + stars: | 2023-11-02 | by ( Yoshifumi Takemoto | ) www.reuters.com time to read: +1 min

Japanese Prime Minister Fumio Kishida poses during a photo session with his new cabinet members at the prime minister's official residence in Tokyo, Japan, September 13, 2023. To fund part of the spending, the government will compile a supplementary budget for the current fiscal year of 13.1 trillion yen, Kishida told reporters. Reuters reported on Wednesday the government is considering spending over 17 trillion yen for the package, which will include temporary cuts to income and residential taxes as well as subsidies to curb gasoline and utility bills. The rising cost of living is partly blamed for pushing down Kishida's approval ratings, piling pressure on the prime minister to take steps to ease the pain on households. ($1 = 150.5100 yen)Reporting by Yoshifumi Takemoto, writing by Leika Kihara; Editing by Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

Persons: Fumio Kishida, Zhang Xiaoyu, Kishida, Yoshifumi Takemoto, Leika Kihara, Kim Coghill Organizations: REUTERS Acquire, Rights, Reuters, Thomson Locations: Tokyo, Japan, COVID

☆ Asia's factories squeezed as China's nascent recovery teeters
▼ + stars: | 2023-11-01 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Purchasing managers' indexes (PMIs) for factory powerhouses China, Japan and South Korea showed activity shrinking while Vietnam and Malaysia also struggled with the broadening fallout from a Chinese slowdown. "Overall, manufacturers were not in high spirits in October," said Wang Zhe, an economist at Caixin Insight Group, on China's survey outcome. Japan's factory activity shrank for a fifth straight month in October, the final au Jibun Bank PMI showed. South Korea's factory activity fell for the 16th straight month while PMIs from Taiwan, Vietnam and Malaysia also showed continued declines in activity. The International Monetary Fund (IMF) has warned that China's weak recovery and the risk of a more protracted property crisis could further dent Asia's economic prospects.

Persons: Stringer, Wang Zhe, Leika Kihara, Sam Holmes Organizations: REUTERS, PMI, P Global, Caixin Insight, Jibun, Murata Manufacturing, Monetary Fund, IMF, Thomson Locations: Zouping, Shandong province, China, Japan, South Korea, TOKYO, Vietnam, Malaysia, PMIs, Taiwan, Asia

☆ Japan on standby to deal with 'one-sided' yen moves - top FX diplomat
▼ + stars: | 2023-10-31 | by ( Takaya Yamaguchi | ) www.reuters.com time to read: +2 min

REUTERS/Issei Kato Acquire Licensing RightsTOKYO, Nov 1 (Reuters) - Japan's top currency diplomat Masato Kanda said on Wednesday authorities were on standby to respond to recent "one-sided, sharp" moves in the yen, escalating his warning to investors against pushing down the currency too much. "Speculative trading seems to be the biggest factor behind recent currency moves," Kanda, vice finance minister for international affairs, told reporters on the yen's declines. The situation surrounding yen moves has become "more tense" than before, he said, adding that authorities will "respond appropriately without ruling out any options". After sliding to 151.715 against the dollar overnight on Tuesday, the yen stood at 151.350 in Asia on Wednesday. It intervened again in October 2022 after the yen plunged to a 32-year low of 151.94.

Persons: Masato Kanda, Issei Kato, Kanda, Takaya Yamaguchi, Satoshi Sugiyama, Leika Kihara, Sam Holmes Organizations: Reuters, Finance Ministry, REUTERS, Rights, Bank of Japan, Thomson Locations: Tokyo, Japan, Asia

☆ BOJ modifies yield curve control, re-defines long-term rate cap
▼ + stars: | 2023-10-31 | by ( ) www.reuters.com time to read: +1 min

An office employee walks in front of the bank of Japan building in Tokyo, Japan, April 7, 2023. REUTERS/Androniki Christodoulou Acquire Licensing RightsTOKYO, Oct 31 (Reuters) - The Bank of Japan modified its bond yield control again on Tuesday by re-defining 1.0% as an "upper bound" with room for allowance, rather than a rigid cap. "The BOJ will regard the upper bound of 1.0% for the 10-yaer Japanese government bond (JGB) yield as a reference" and continue large-scale bond buying and nimble market operations, the central bank said in a statement. As widely expected, the BOJ maintained a 0.1% interest charged on financial institutions' excess reserves parked with the central bank, and a 0% target for the 10-year government bond yield set under its yield curve control (YCC) policy. Reporting by Leika Kihara and Tetsushi Kajimoto Editing by Chang-Ran KimOur Standards: The Thomson Reuters Trust Principles.

Persons: Androniki, Leika Kihara, Chang, Ran Kim Organizations: REUTERS, Rights, Bank of Japan, Thomson Locations: Japan, Tokyo

☆ BOJ likely to lift inflation forecasts, debate tweak to yield cap
▼ + stars: | 2023-10-30 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

The BOJ sets a target of around 0% for the 10-year yield under YCC. Since then, rising global bond yields and persistent inflation have put the BOJ in a tight spot with the 10-year JGB yield threatening to breach the 1% cap. The 10-year bond yield rose to a fresh decade high of 0.955% on Tuesday. Sources told Reuters last week the BOJ could debate further tweaks to YCC at the Oct. 30-31 meeting to relax its grip on the 10-year yield. The BOJ is widely expected to maintain the 0% target for the 10-year yield and that for short-term rates at -0.1%.

Persons: BOJ, Ueda, Ataru Okumura, Kazuo Ueda, Leika Kihara, Sam Holmes Organizations: Bank of, Nikkei, Nikko Securities, Reuters, Thomson Locations: TOKYO, Bank of Japan, Japan

The data reinforces expectations the Bank of Japan (BOJ) will revise up its inflation forecasts when it produces fresh quarterly projections at next week's policy meeting. The Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 2.7% in October from a year earlier, government data showed on Friday, exceeding market forecasts for a 2.5% gain. The so-called "core core" index that strips away both fresh food and fuel prices - closely watched by the BOJ as a gauge of broader price trends - rose 3.8% in October from a year earlier after a 3.9% increase in September, the data showed. "With services inflation continuing to accelerate, it will take a long time before inflation falls back below the BOJ's 2% target." The BOJ remains a global dovish outlier, having maintained ultra-loose policy even as major central banks elsewhere raised interest rates aggressively to fight rampant inflation.

Persons: Androniki, Marcel Thieliant, Takahiko Wada, Shri Navaratnam, Sam Holmes Organizations: REUTERS, Bank of Japan, Reuters Graphics, Capital Economics, Reuters, Thomson Locations: Tokyo, Japan, TOKYO, Asia

A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. The spending plan, to be formally decided by Prime Minister Fumio Kishida's cabinet on Nov. 2, also features payouts to low-income households, the officials said, confirming a report by the Nikkei newspaper. Tax revenue has grown this year, and Murai said the prime minister wanted to find a way to return some of that to the public to support households. "The prime minister will give formal and specific instruction at a meeting tomorrow between officials of the government and the ruling bloc, which will shape up through the ruling party's tax panel debate," Murai said. Kishida is due to discuss wage hikes, among other issues, with auto industry officials when he visits the Japan Mobility Show on Thursday, Murai said.

Persons: Androniki, Fumio Kishida's, Hideki Murai, Murai, Kishida, Takaya Yamaguchi, Yoshifumi Takemoto, Leika Kihara, Shri Navaratnam, Sonali Paul Organizations: REUTERS, Rights, Reuters, Nikkei, Japan, Thomson Locations: Tokyo, Japan, COVID

☆ Rising yields may pressure BOJ to consider raising newly set cap
▼ + stars: | 2023-10-23 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

The BOJ remains a global outlier having maintained ultra-loose monetary stimulus even as major central banks elsewhere rapidly raised interest rates to fight rampant inflation. Meanwhile, rising U.S. bond yields are pulling their Japanese counterparts higher, complicating the BOJ's task of keeping local interest rates low. Among ideas that could be discussed would be to raise the ceiling for the 10-year bond yield beyond 1.0%, or steps that water down the BOJ's commitment to defend a set yield level, the sources said. "If the 10-year JGB yield rises to around 0.9%, the BOJ may need to take action," such as by raising the 1% cap, she added. In a Reuters poll in September, most analysts said they expect the BOJ to abandon YCC by the end of 2024.

Persons: Issei Kato, BOJ, YCC, Kazuo Ueda, Naomi Muguruma, Mitsubishi UFJ, Mitsubishi UFJ Morgan Stanley, Ueda, Leika Kihara, Sam Holmes Organizations: Bank of Japan, REUTERS, Treasury, Nikkei, Mitsubishi, Mitsubishi UFJ Morgan, Mitsubishi UFJ Morgan Stanley Securities, YCC, Thomson Locations: Tokyo, Japan, TOKYO

☆ Analysis: Middle East throws central banks yet more unknowns
▼ + stars: | 2023-10-20 | by ( Mark John | ) www.reuters.com time to read: +5 min

Now, to complicate matters for a professional caste which prides itself on being data-driven, the Middle East is throwing a new set of real but unquantifiable risks into their equations. Unless the picture changes dramatically in coming days, the European Central Bank, U.S. Federal Reserve, Bank of England and Bank of Japan are already expected to keep their policy rates on hold in meetings over the next two weeks. ECB rate-setter Yannis Stournaras, the governor of the Greek central bank, argued that Europe had broadly managed to absorb the effects of rising energy costs triggered by the Ukraine war and hoped it could do the same if further shocks emerged. For now, the conflict remains largely confined to Israel and Gaza, something S&P Global Market Intelligence said in a study this week was already "muddying the waters" for central banks. As the Fed's Powell put it: "Our institutional role at the Federal Reserve is to monitor these developments for their economic implications, which remain highly uncertain".

Persons: Jerome Powell, David Westin, Brendan McDermid, Powell, Huw Pill, Yannis Stournaras, Tetsuya Hiroshima, Fed's Powell, Dan Burns, Balazs Koranyi, Francesco Canepa, Maria Martinez, Leika, Kevin Yao, David Milliken, Tomasz Janowski Organizations: Federal, Anchor, Bloomberg, Street, Economic, of New, REUTERS, Bank of England, International Monetary Fund, European Central Bank, U.S, Federal Reserve, Bank of Japan, Fed, ECB, Reuters Graphics, Reuters, Tokai, Toyota Motor Corp, P Global Market Intelligence, Thomson Locations: of New York, New York City, U.S, Israel, Ukraine, Iran, Hormuz, Europe, United States, Japan, Gaza, Washington, Frankfurt, Berlin, Tokyo, Beijing, London

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