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☆ Japan PM says can't rule out return of deflation despite price spike
▼ + stars: | 2023-01-27 | by ( Kantaro Komiya | ) www.reuters.com time to read: +2 min

TOKYO, Jan 27 (Reuters) - Japanese Prime Minister Fumio Kishida said on Friday that a return to deflation in the world's third-largest economy cannot be ruled out, because domestic demand remains weak. But Kishida described the move as an operational tweak to smooth the impact of monetary easing, which is distorting the country's bond markets. Policymakers are hoping that wage increases this spring will cushion higher living costs and boost consumer spending. Kishida on Sunday said he would nominate the next BOJ leader next month before the incumbent Haruhiko Kuroda's second five-year term expires on April 8. Reporting by Kantaro Komiya; Editing by Jacqueline Wong and Kim CoghillOur Standards: The Thomson Reuters Trust Principles.

☆ IMF: BOJ should let long-term yields rise, be ready to raise rates
▼ + stars: | 2023-01-26 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

REUTERS/Kim Kyung-HoonTOKYO, Jan 26 (Reuters) - The Bank of Japan should let government bond yields move more flexibly and be ready to raise short-term interest rates swiftly if "significant" upside risks to inflation materialise, the International Monetary Fund (IMF) said on Thursday. "Given the two-sided risks to inflation, more flexibility in long-term yields would help to avoid abrupt changes later. This would help better manage inflation risks and also help address the side-effects of prolonged easing," the IMF said. EYING THE EXITThe IMF said the BOJ could also consider options such as targeting a shorter-term yield or the pace of its bond buying. The BOJ doubled its allowance band for the 10-year yield in December to 0.5% above or below zero.

☆ IMF urges BOJ to let long-term yields rise, be ready to raise rates
▼ + stars: | 2023-01-26 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

It's more to balance some of the impact on the real economy against the impact on financial markets," IMF Japan Mission Chief Ranil Salgado said on Thursday. "Given the two-sided risks to inflation, more flexibility in long-term yields would help to avoid abrupt changes later. This would help better manage inflation risks and also help address the side-effects of prolonged easing," the IMF said in a statement issued after the policy consultation. EYING THE EXITThe IMF said the BOJ could also consider options such as targeting a shorter-term yield or the pace of its bond buying. The BOJ surprised markets in December by doubling its allowance band for the 10-year yield to 0.5% above or below zero.

It followed a 3.9% rise in December and stayed above the central bank's 2% target for an eighth straight month, data showed on Friday. "These readings point squarely at a further, large increase in inflation at the national level this month," said Darren Tay, Japan economist at Capital Economics. Government measures to lower energy bills will kick in next month and bring inflation down by about 1% point," he said. The BOJ kept monetary policy ultra-loose this month but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households. Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand.

☆ BOJ policymakers divided on wage, inflation outlook, Jan meeting summary shows
▼ + stars: | 2023-01-26 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

At the January meeting, many board members agreed on the need to retain ultra-loose monetary policy to support the economy and help companies raise pay, the summary showed. It will take time for wages to rise sustainably, so macro-economic support is necessary," another opinion showed. The summary lists the opinions of the BOJ's nine board members, but does not disclose who made them. Japan's core consumer prices in December rose 4.0% from a year earlier, hitting a fresh 41-year high and keeping alive market expectations the BOJ could phase out ultra-low rates. BOJ Governor Haruhiko Kuroda, whose term ends in April, has stressed the need to maintain the loose policy settings until wages rise sufficiently, and help keep inflation sustainably around the bank's 2% target.

☆ Japan sees rising interest rates expanding its growing debt pile
▼ + stars: | 2023-01-24 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +3 min

The latest projections showed the budget target will be met in fiscal 2026. Rises in interest rates will test the government's ability to service the industrial world's heaviest debt burden at more than double the size of Japan's annual gross domestic product. "We see underlying interest rates to be somewhat higher, which will cause outstanding government debt to deviate upward due to the BOJ's move last month," a Cabinet Office official said. In comparison, the previous estimates issued in July showed long-term rates to stick to 0.1% in fiscal 2022-2025. The projections show that in case long-term interest rates rise by an additional 0.5 percentage-points, that would increase the government debt-to-GDP ratio by 3.3 percentage-points.

☆ Suntory CEO expects next BOJ governor to show clear policy roadmap
▼ + stars: | 2023-01-24 | by ( ) www.reuters.com time to read: +2 min

The BOJ stuck to its ultra-easy policy at a two-day policy meeting that ended on Jan. 16, defying investors who had bet on it ceasing to defend a cap on the 10-year government bond yield. The cap is part of a policy called yield curve control (YCC). But Niinami said expectations were growing that the BOJ would sooner or later end its expansionist experiment. "The ultra-easy policy can't be kept forever, given current (economic) conditions. Niinami also said economic growth led by the private sector would be needed to help prevent Japan's financial health worsening further.

☆ Euro clears 9-month peak as ECB hawks let fly
▼ + stars: | 2023-01-23 | by ( Wayne Cole | ) www.reuters.com time to read: +3 min

The euro reached as far as $1.0903 , breaking the recent peak of $1.08875 and opening the way to a spike top from last April at $1.0936. It was aided by European Central Bank (ECB) governing council member Klaas Knot, who said interest rates would rise by 50 basis points in both February and March and continue climbing in the months after. A Reuters survey of analysts also favoured a hike of 50 basis points in March and an eventual top of 3.25%. Investors also have around 50 basis points of U.S. rate cuts priced in for the second half of the year, reflecting softer data on inflation, consumer spending and housing. read moreAny hint the replacement is less dovish than current governor Haruhiko Kuroda could see the yen climb anew.

☆ Bank of Japan's policy tweak drew rare request from government for a break
▼ + stars: | 2023-01-23 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

TOKYO, Jan 23 (Reuters) - Government representatives who attended the Bank of Japan's policy meeting in December were granted a half-hour adjournment to contact their ministries, minutes showed, a sign the decision to tweak its yield control policy may have been hastily arranged. At the Dec. 19-20 meeting, the BOJ kept its ultra-easy monetary policy but shocked markets with a surprise tweak to its yield curve control (YCC) policy that allowed long-term interest rates to rise. Governor Haruhiko Kuroda approved the request as chair of the BOJ meeting, according to the minutes. The two representatives did not voice opposition to the yield control tweak nor any other elements of the BOJ's discussion, the minutes showed. Two government representatives - one from the MOF and another from the Cabinet Office - are legally entitled to attend BOJ policy meetings and voice the government's views on policy decisions, though they cannot cast votes.

☆ Euro nears nine-month peak as ECB hawks let fly
▼ + stars: | 2023-01-23 | by ( Wayne Cole | ) www.reuters.com time to read: +3 min

The euro crept ahead to $1.0870 and nearer its recent nine-month peak of $1.08875. It was aided by European Central Bank (ECB) governing council member Klaas Knot, who said interest rates would rise by 50 basis points in both February and March and continue climbing in the months after. Much the same argument goes for sterling, with markets wagering the Bank of England will hike by half a point to 4.0% at its policy meeting next week. Analysts assume the BOJ will stand the line until at least the next policy meeting in March, though one hurdle will be the expected naming of a new BOJ governor in February. For now, the dollar was holding at 129.40 yen , following last week's wild gyrations between 127.22 and 131.58.

☆ Japan's Kishida says he will nominate new BOJ head next month
▼ + stars: | 2023-01-22 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +2 min

[1/2] Japan's Prime Minister Fumio Kishida speaks during a news conference following the US-Japan summit in Washington, U.S., January 14, 2023. REUTERS/Julia Nikhinson/FilesTOKYO, Jan 22 (Reuters) - Japanese Prime Minister Fumio Kishida said on Sunday he would nominate a new Bank of Japan governor next month, as markets test whether the central bank will change the ultra low-rate policy of the dovish Haruhiko Kuroda. The BOJ stuck to its ultra-easy policy on Wednesday, defying investors who have recently sought to break the bank's cap on the 10-year government bond yield. But with even Kuroda sounding bullish about wage rises, expectations are growing that the BOJ will end its expansionist experiment this year. There is also speculation about changes to a policy accord between the central bank and the government, in which the BOJ pledges to achieve its 2% inflation target as early as possible.

☆ Japan PM keeps markets guessing on new BOJ governor
▼ + stars: | 2023-01-22 | by ( ) www.reuters.com time to read: +2 min

[1/2] Japan's Prime Minister Fumio Kishida speaks during a news conference following the US-Japan summit in Washington, U.S., January 14, 2023. REUTERS/Julia Nikhinson/FilesTOKYO, Jan 22 (Reuters) - Japanese Prime Minister Fumio Kishida said on Sunday that he would take the April economic situation into account when choosing the next Bank of Japan (BOJ) governor, keeping markets guessing who may replace incumbent Haruhiko Kuroda. Speculation is rife among some market players that the central bank may shift away from its stimulus policy when the BOJ leadership changes. There's also talk about possible changes to the policy accord between the central bank and the government in which the BOJ pledges to achieve its 2% inflation target at the earliest possible time. The BOJ stunned markets last month by doubling the allowed band to 50 basis points either side of its 0% 10-year yield target.

"At the same time, we're estimating a mild recession in Europe and the United States that offset it. Ngozi Okonjo-Iweala, director-general of the World Trade Organization, pointed out that the reopening could help supply chains work better and also boost consumer demand. CHINA-US TENSIONSAdjacent to the discussions on China's reopening was what it could mean for its existing tensions with the United States over issues such as technology, trade and Taiwan, which several WEF delegates expressed concern over. "I think both the U.S. and China will be hurt, which doesn't just mean the national entities but workforces, people will be hurt." For daily Davos updates in your inbox sign up for the Reuters Daily Briefing here.

☆ Davos 2023 BOJ's Kuroda vows to keep ultra-loose policy
▼ + stars: | 2023-01-20 | by ( ) www.reuters.com time to read: +2 min

DAVOS, Switzerland, Jan 20 (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Friday the central bank will continue its current "extremely accommodative" monetary policy to achieve its 2% inflation target in a stable, sustainable manner. "Our hope is that wages will start to rise, and that could make our 2% inflation target met in a stable and sustainable manner. Kuroda said the BOJ's decision to widen the band around its 10-year bond yield target was "perfectly right," brushing aside criticism that the move failed to iron out market distortions, and instead fueled speculation of additional tweaks to its yield curve control (YCC) policy. "All in all, the government's policy, coupled with the BOJ's extremely accommodative policy, have been successful in changing Japan's economic structure and growth prospects," he said. "But our 2% inflation target has not been achieved in a sustainable, stable manner," he said.

☆ ‘Utterly unprepared’: Larry Summers says another Covid-scale problem is a top economic risk
▼ + stars: | 2023-01-20 | by ( Jenni Reid | ) www.cnbc.com time to read: +2 min

Economist Larry Summers would place better than 50-50 odds on the world being shaken by another Covid-scale event within the next 15 years. The Harvard professor and former U.S. treasury secretary shared what he believes are the world's biggest near-term risks during a CNBC-moderated panel on the last day of the World Economic Forum in Davos, Switzerland. They included the possibility of the Covid-19 virus mutating again, which he noted that no other panelist had brought up when discussing the global economic outlook. "I would note that the odds in my view are better than 50-50 that there will be a Covid-scale problem within the next 15 years and that the world is utterly unprepared for that eventuality," he said. Where it has been a topic of discussion, it has generally been around risks to the Chinese population as it experiences a spike in infections.

☆ Bank of Japan’s Kuroda defends central bank’s yield curve control measures
▼ + stars: | 2023-01-20 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailBank of Japan’s Kuroda defends central bank’s yield curve control measuresSpeaking during a panel session the World Economic Forum in Davos, Switzerland, Bank of Japan Governor Haruhiko Kuroda discusses the central bank's decision to widen the trading band in its yield curve control program last month.

SINGAPORE, Jan 20 (Reuters) - Japan's central bank appears to have scored an interim win in its long-drawn battle with bond bears. The Bank of Japan's (BOJ) policy meeting this week was, at first glance, a damp squib for excited markets. It maintained its cap on 10-year yields, defying market expectations for change, and modified a funds-supply operation such that it offers more money for longer tenors to banks. After Wednesday's decision to retain ultra-low rates, 10-year bond yields, which had been testing the BOJ's 0.5% cap for a week, settled below 0.4%, suggesting many speculators were closing positions. "Most people are concerned about market liquidity in the bond market," a senior trader at a global bank in Asia told Reuters.

☆ Explainer: How the BOJ's new yield-controlling tool works
▼ + stars: | 2023-01-20 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

Specifically, the BOJ amended rules for an existing market operation tool, so it can pump funds extending up to 10 years in variable rates to financial institutions against collateral. While the new tool could keep bond bears at bay, there is uncertainty on how effective it would be in keeping long-term interest rates from rising. Defying bets of a policy tweak, the BOJ kept ultra-low interest rates and the 0.5% yield cap on Wednesday. It is unusual for central banks to use funds-supplying operation, typically focused on guiding short-term interest rates, to influence long-term rates. By tweaking the tool, the BOJ can enhance its control over interest rate moves and risks stifling market-driven asset pricing.

☆ European markets set for higher open, seeking rebound as investors weigh Fed risks
▼ + stars: | 2023-01-20 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

European markets are set to climb on Friday as traders look for a partial recovery from Thursday's selloff, with the outlook for monetary policy still firmly in focus. Investors have grown increasingly concerned that the Federal Reserve will continue to hike interest rates despite signs of slowing inflation. Both the Dow Jones Industrial Average and the S&P 500 notched a third straight day of losses on Thursday, and U.S. stock futures were cautiously higher in early premarket trade on Friday. Shares in Asia-Pacific were mostly higher on Friday as investors digested Japanese inflation data, which showed nationwide core consumer prices rose by an annual 4% in December, the fastest inflation rate since 1981. Friday marks the conclusion of the World Economic Forum in Davos, Switzerland, where policymakers and CEOs have been discussing the key issues surrounding the economy, financial markets, geopolitics and climate change.

☆ Bank of Japan defends yield curve control measures, intends to stick to ultra-easy monetary policy
▼ + stars: | 2023-01-20 | by ( Sam Meredith | ) www.cnbc.com time to read: +1 min

Bank of Japan Governor Haruhiko Kuroda on Friday defended the central bank's decision to widen the trading band in its yield curve control program and committed to continuing the BOJ's "extremely accommodative" expansionary monetary policy. His comments at Davos come shortly after the central bank defied market expectations by sticking to a core tenet of its ultra-loose monetary policy. The BOJ on Wednesday opted to keep its ultra-dovish -0.1% interest rate unchanged and maintained its yield curve tolerance band. It leaves the BOJ at odds with other major central banks, which have hiked interest rates in a bid to tackle rising inflationary pressure. Nonetheless, the world's third-largest economy reported core consumer prices rose to 4% on an annualized basis in the final month of last year, double the central bank's target of 2%.

☆ Dollar climbs against yen as BOJ affirms ultra-easy policy
▼ + stars: | 2023-01-20 | by ( ) www.cnbc.com time to read: +2 min

Speculators are betting that the BOJ, the last major central bank to still employ loose monetary policy, is edging towards a shift to a tighter stance. That has driven a rally in the yen that has pushed the dollar/yen pair down by 14% in the past three months. So between now and the next meeting, there is no policy shift and that is indicated by Kuroda," he added. The dollar rose as high as 130.60 yen and was last up 0.9% at 129.58. On the week, the dollar rose 1.3% versus the Japanese currency.

☆ IMF's Georgieva and ECB's Lagarde discuss the future of global growth at Davos
▼ + stars: | 2023-01-20 | by ( Cnbc.Com Staff | ) www.cnbc.com time to read: 1 min

[The stream is slated to start at 5 a.m. Please refresh the page if you do not see a player above at that time.] Moderated by CNBC's Geoff Cutmore, top business leaders and policymakers discuss the future of growth at Davos, Switzerland, and the policies needed to stabilize the global economy. Joining CNBC is Kristalina Georgieva, the managing director of the International Monetary Fund, Christine Lagarde, president of the European Central Bank, Bruno Le Maire, France's finance minister, Larry Summers, Charles W. Eliot University Professor at the Harvard Kennedy School of Government, and Kuroda Haruhiko, governor of the Bank of Japan. Subscribe to CNBC on YouTube.

TOKYO, Jan 19 (Reuters) - The Bank of Japan may raise a cap set around its 10-year bond yield target to 0.75% or double it to 1.0% by around mid-year if inflation overshoots its expectations, Columbia University academic Takatoshi Ito said on Thursday. Depending on inflation and wage developments, the central bank may also abandon negative rates by raising its short-term interest rate target from -0.1% by the end of this year, Ito told Reuters in an interview. Ito, who is a close associate of BOJ Governor Haruhiko Kuroda's, is considered by some analysts as a candidate to join the central bank's leadership when the terms of Kuroda and his two deputies end in the coming months. Kuroda's term is up in April, while those of his two deputies expire in March. Reporting by Leika Kihara and Takaya Yamaguchi Editing by Chang-Ran KimOur Standards: The Thomson Reuters Trust Principles.

The increase in the core consumer price index (CPI), which excludes volatile fresh food but includes oil costs, matched a median market forecast and followed a 3.7% annual gain seen in November. The annual rise in core CPI thus exceeded the BOJ's 2% target for a ninth straight month. We might see inflation stay above the BOJ's 2% target well into autumn this year," he said. Core-core CPI, which strips away both fresh food and energy costs, was 3.0% higher in December than a year earlier, accelerating from a 2.8% gain seen in November. The BOJ kept monetary policy ultra-loose on Wednesday but raised its inflation forecasts in fresh quarterly projections, as companies continued to pass on higher raw material costs to households.

If inflation stays around 2% and Japan sees significant wage hikes, the BOJ could normalise monetary policy. "Supply shock is behind the recent pick-up in inflation," said Yasunari Ueno, chief market economist at Mizuho Securities. Dai-ichi Life's Shinke expects core consumer inflation to accelerate further in January, before slowing due to the effect of government subsidies aimed at curbing utility bills. The base effect of last year's sharp rise in consumer prices will also slow the pace of increase in inflation later this year, analysts say. BOJ Governor Haruhiko Kuroda, whose term will end in April, has stressed the need to keep monetary policy ultra-loose until wages rise more, changing the recent cost-push inflation into inflation driven by robust domestic demand.

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