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☆ Kuroda departs BOJ after inflation fails to fly like 'Peter Pan'
▼ + stars: | 2023-04-07 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

The 78-year-old gives his press conference at 0630GMT, the Bank of Japan (BOJ) said. Kuroda was not the first BOJ chief to attempt to influence public perceptions with monetary easing. In 2015, he alluded to the Peter Pan fairy tale in explaining that to fire up inflation, the BOJ needed to have the public believe in its monetary magic with massive stimulus. When allusions to Peter Pan and spacecraft failed, the BOJ shifted to a defensive, long-term approach in 2016 with the introduction of yield curve control (YCC). "The BOJ's failure to change public expectations raises a lot of questions about the effectiveness of unconventional monetary policy."

☆ Analysis: New BOJ chief to slowly unwind Kuroda's policy experiment
▼ + stars: | 2023-04-06 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

In a sign he will be in no rush to shift policy, Ueda told a parliamentary confirmation hearing in February that he will "spend time and engage in thorough discussions" with BOJ board members on how to address the side-effects of prolonged easing. But a closer look at his past, more candid remarks as a private-sector economist, and as a BOJ board member during Japan's battle with deflation in the late 1990s, offers a glimpse of his policy and communication style. Removing YCC altogether will deprive the BOJ tools to combat an unwelcome spike in bond yields, says former board member Takahide Kiuchi. Accounts of his days as BOJ board member also suggest Ueda is no fan of heavy money printing. Both in the confirmation hearings and in past remarks as board member, he has stressed the importance of using communication to enhance the effects of monetary policy.

While factory output rebounded in February, some analysts warn of mounting downside risks as slumping global demand for technology goods hits the country's exports. Inflation will probably stay elevated at least during the first half of this year," said Yoshiki Shike, chief economist at Dai-ichi Life Research Institute. Separately, factory output rose 4.5% in February from January, better than a forecast 2.7% gain and rebounding from a revised 5.3% drop in January, on easing supply bottlenecks for carmakers. "There's a bigger risk of a downgrade in manufacturers' output plans due to weaknesses in the information-technology (IT) sector. Global demand is shifting away from goods towards services, which is bad news for Japan's export-reliant economy," Shinke of Dai-ichi Life Research said.

The data underscores the challenge incoming Bank of Japan (BOJ) Governor Kazuo Ueda faces in assessing whether the recent cost-driven inflation will shift to one backed by solid demand and wage growth. The pace of increase slowed from a 3.3% gain in February and a nearly 42-year high of 4.3% hit in January, due largely to the effect of government subsidies to curb utility bills. In a glimmer of hope, factory output rose 4.5% in February from the previous month, government data showed on Friday, more than a median market forecast for a 2.7% gain. Manufacturers surveyed by the government expect to increase output by 2.3% in March and by 4.4% in April, the output data showed. Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Jacqueline WongOur Standards: The Thomson Reuters Trust Principles.

☆ BOJ's new deputy chief flags chance of change to yield control policy
▼ + stars: | 2023-03-29 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

"If various conditions fall in place, some sort of change to yield curve control may become necessary. If conditions turn positive, (a tweak) will undoubtedly become a possibility," Uchida told parliament. Uchida said trend inflation was "extremely important" in judging whether Japan will sustainably meet the BOJ's 2% price target. Rather than focusing on a particular set of indicators, however, the central bank will look comprehensively at various data in setting monetary policy, he added. A career central banker, Uchida is one of two deputy governors.

☆ BOJ debated feasibility of tweaking yield control in January, minutes show
▼ + stars: | 2023-03-15 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

At the January meeting, the BOJ maintained its ultra-low interest rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure. "The BOJ must keep various options in mind in guiding monetary policy. But with overseas economies slowing now, it's inappropriate to rush towards an exit" from ultra-easy policy, another board member said, according to the minutes. Under yield curve control (YCC), the BOJ guides short-term rates at -0.1% and the 10-year bond yield around zero as part of efforts to sustainably hit its 2% inflation target. Instead of tweaking YCC, the BOJ modified its funds-supply market operation in January to use it as a new tool to prevent long-term rates from rising too much.

☆ BOJ board debated feasibility of tweaking YCC - Jan meeting minutes
▼ + stars: | 2023-03-15 | by ( Leika Kihara | ) www.reuters.com time to read: +1 min

TOKYO, March 15 (Reuters) - Bank of Japan (BOJ) policymakers debated the feasibility of making further tweaks to its bond yield curve control with one member saying it must keep "various options in mind" on the future course of monetary policy, minutes of its January meeting showed on Wednesday. The nine-member board concluded that it was premature to exit ultra-loose monetary policy now with inflation yet to sustainably achieve the BOJ's 2% target, according to the minutes of the Jan. 17-18 meeting. "The BOJ must keep various options in mind in guiding monetary policy. But with overseas economies slowing now, it's inappropriate to rush towards an exit" from ultra-easy policy, another board member said, according to the minutes. At the January meeting, the BOJ maintained ultra-low rates, including a bond yield cap it was struggling to defend, defying market expectations it would phase out its massive stimulus programme amid mounting inflationary pressure.

☆ Kuroda defends Bank of Japan's ultra-dovish stance in his final policy meeting
▼ + stars: | 2023-03-10 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

Haruhiko Kuroda, governor of the Bank of Japan (BOJ), at the central bank's headquarters in Tokyo, Japan, on Thursday, May 27, 2021. Bloomberg | Bloomberg | Getty ImagesJapan's outgoing central governor Haruhiko Kuroda defended the Bank of Japan's ultra-dovish monetary policy stance at his final policy meeting on Friday. Kuroda has led the central bank's ultra-dovish monetary policy for the past decade – even as global central banks in recent months raised interest rates in a bid to tame inflation. "Financial conditions have been accommodative on the whole, although weakness in firms' financial positions has remained in some segments," the central bank said. New BOJ leadershipJapan's upper house in parliament approved Ueda to be the next central bank governor, Kyodo reported.

☆ Morning Bid: Bond blows batter banks as SVB cracks
▼ + stars: | 2023-03-10 | by ( ) www.reuters.com time to read: +5 min

SVB may be an unusual case in point - given its exposure to both last year's attrition in the tech sector, related startups and bond markets. Major U.S. banks were also hit, with Wells Fargo (WFC.N) down 6%, JPMorgan (JPM.N) down 5.4%, Bank of America (BAC.N) 6% lower and Citigroup (C.N) 4% lower. In currency markets, the dollar held the line on Friday in its lonely easy monetary policy stance. The BOJ held off making changes to its controversial bond yield cap policy, leaving all options open ahead of a leadership transition in April. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

The yen was last down about 0.15% at 136.36 after a knee-jerk plunge of as much as 0.62% after the BOJ kept policy unchanged in Governor Haruhiko Kuroda's final policy meeting before retirement. Despite some volatility against the yen, the U.S. dollar was mostly flat on Friday. Against a basket of currencies, the U.S. dollar index was little changed at 105.28 but remained on track for a weekly gain of 0.73%. The focus now turns to the closely watched nonfarm payrolls report later on Friday, the next major data point that could offer clues on the Fed's next steps for monetary policy. According to a Reuters survey of economists, nonfarm payrolls likely increased by 205,000 jobs in February after surging by 517,000 in January.

☆ Bank of Japan keeps low rates as Kuroda sticks to script at swan song meeting
▼ + stars: | 2023-03-10 | by ( ) edition.cnn.com time to read: +4 min

At its two-day meeting that ended on Friday, the BOJ maintained its short-term interest rate target at -0.1% and that for the 10-year bond yield around 0%. It also left unchanged a band set around the 10-year yield target that allows the yield to rise up to 0.5%. “The decision to uphold policy rates comes at a cost. Many investors expect the central bank to phase out YCC when Kuroda’s successor, Kazuo Ueda, takes the helm in April. “The BOJ will likely abandon its 10-year bond yield target, while maintaining negative interest rates, to arrest distortions in the yield curve,” he said.

☆ BOJ set to keep ultra-low rates at Kuroda's final policy meeting
▼ + stars: | 2023-03-09 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

"After conducting an examination of its policy framework, the BOJ will either abandon the 10-year yield target or shift to one targeting a shorter duration," she said. At the two-day meeting ending on Friday, the BOJ is set to maintain its short-term interest rate target at -0.1% and that for the 10-year bond yield around 0%. Some market players bet the BOJ could widen the band set around the 10-year yield target, allowing the yield to rise up to 0.75%, from the current 0.5%, as early as Friday. But many analysts polled by Reuters expect any tweak in YCC to happen after Ueda takes over as new governor. Ueda will chair his first policy meeting on April 27-28, when the board will produce closely watched, fresh quarterly growth and price forecasts extending through fiscal 2025.

With the approval, government nominee Kazuo Ueda will officially succeed incumbent BOJ Governor Haruhiko Kuroda whose second, five-year term ends on April 8. But the BOJ's current policy is a necessary, appropriate means to achieve 2% inflation," Ueda told parliament last month, signalling that he was in no rush to hike rates. "I'll succeed the policy in the context of seeking to hit the BOJ's 2% inflation stably and sustainably," Ueda replied. Hiroshi Shiratori, a professor at Japan's Hosei University, see the appointment of Ueda as a sign Kishida wants the BOJ to phase out the legacy policy of Abenomics. "Ueda is saying the BOJ will maintain low rates for now.

☆ Asia stocks rally, bonds tense for U.S. rate tests
▼ + stars: | 2023-03-06 | by ( Wayne Cole | ) www.reuters.com time to read: +5 min

Japan's Nikkei (.N225) climbed 1.0% to a three-month top, while South Korean stocks (.KS11) added 0.6% helped by a softer reading on inflation. S&P 500 futures dipped 0.1% and Nasdaq futures 0.2%, after rallying on Friday as bond yields eased back a little. Futures imply a 72% chance the Fed will go by 25 basis points at its meeting on March 22. The BOJ jolted markets in December when it unexpectedly widened the allowed trading band for 10-year bond yields to between -50 and +50 basis points. Friday's pullback in bond yields helped gold recover some ground and it was trading at $1,855 an ounce .

The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel costs, exceeded the BOJ's 2% target for nine straight months. The slowdown was mostly due to the effect of government energy subsidies to curb soaring utility bills, the data showed. It marked the fastest year-on-year pace of increase since August 1991, when the index also rose 3.2%. Service inflation, which the BOJ sees as key to achieving sustained wage growth, perked up to 1.3% in February from 1.2% in January, the data showed. Nationwide core consumer prices rose 4.2% in January from a year earlier, hitting a fresh 41-year high, as an increasing number of companies passed on higher costs to households.

Rather, it must come up with ideas" to mitigate the costs and help sustain stimulus, Uchida told an upper house confirmation hearing. The remarks follow those of incoming BOJ Governor Kazuo Ueda on Monday suggesting his preference to spend "plenty of time" if the central bank were to conduct a review of its policy framework. While stressing that it was premature to discuss an exit strategy from ultra-loose monetary policy, Uchida said any exit would involve adjustments in the BOJ's interest rate targets and the level of its balance sheet. "In what order and at what timing the BOJ will make these adjustments will depend on economic and financial developments at the time," Uchida said. The BOJ can tap its experience conducting ultra-loose policy and dealing with market forces, to ensure it can steer a smooth exit regardless of economic conditions at the time, he said.

The recent rise in Japan's consumer inflation is driven by cost-push factors rather than strong demand, warranting the BOJ to maintain ultra-loose policy, Ueda said. "There's still some distance for Japan to see inflation sustainably and stably meet the BOJ's 2% target," he told an upper house confirmation hearing. "Big improvements must be made in Japan's trend inflation for the BOJ to shift towards monetary tightening," Ueda said. "In guiding monetary policy, central banks must weigh the benefits and costs of each step," Ueda said. "There are various side-effects emerging, but the BOJ's current policy is necessary and appropriate" to achieve its 2% inflation target, he said.

☆ Dollar steady on higher-for-longer rates outlook; yen volatile
▼ + stars: | 2023-02-24 | by ( Ankur Banerjee | ) www.reuters.com time to read: +3 min

SINGAPORE, Feb 24 (Reuters) - The dollar held firm on Friday as investors braced for U.S. interest rates to be higher for longer, while the yen was volatile, with incoming Bank of Japan Governor Kazuo Ueda saying it was appropriate to maintain an ultra-loose monetary policy. The yen was volatile on the day and swung between gains and losses against the dollar as investors parsed through the comments from Ueda, who was speaking at the lower house confirmation hearing. The recent spate of strong U.S. economic data and hawkish rhetoric from Fed officials have led the dollar to erase its year to date losses. The dollar index , which measures the U.S. currency against six other rivals, was up 0.019% at 104.580 and was set for a fourth straight week of gains. The euro was up 0.04% at $1.0599, while sterling was last trading at $1.2016, up 0.02% on the day.

☆ Instant view: Incoming BOJ chief Ueda says current low rates appropriate
▼ + stars: | 2023-02-24 | by ( ) www.reuters.com time to read: +6 min

Feb 24 (Reuters) - Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said on Friday it was appropriate to maintain ultra-loose monetary policy as inflation has yet to sustainably and steadily meet the central bank's 2% target. "I think he's intentionally doing that, so that the market will calm down a little bit about policy change expectations." "I don't think Ueda has the same stance as (Haruhiko) Kuroda but it is not clear whether Ueda would tweak the BOJ policy as the market expected." CHARU CHANANA, MARKET STRATEGIST, SAXO MARKETS, SINGAPORE"No surprises there, we expected Ueda to take it slow and he's starting off echoing Kuroda's views. He has been out of touch with the BOJ policy making since 2005 and will take time even if he was to consider policy normalisation at some stage."

☆ Asian markets breathe sigh of relief amid Ueda hearing
▼ + stars: | 2023-02-24 | by ( Stella Qiu | ) www.reuters.com time to read: +4 min

[1/2] The Japanese government's nominee for the Bank of Japan (BOJ) Governor Kazuo Ueda attends a hearing session at the lower house of the parliament in Tokyo, Japan, February 24, 2023. Ueda's confirmation hearing in the lower house comes as markets renew their attack on YCC, taking bets on a near-term interest rate rise. Japan's five-year government bond yield fell a little to 0.235%, from the previous close of 0.240%. The yield on the benchmark 10-year government bonds eased as far as 3.8590%, compared with the previous close of 3.8810%. The two-year bond yield was hovering at 4.6810%, compared with the previous close of 4.6930%.

☆ Incoming BOJ chief Ueda to speak in parliament as yield cap comes under attack
▼ + stars: | 2023-02-23 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

[1/3] A general view shows a parliamentary session at the Lower House of Parliament in Tokyo, Japan November 10, 2021. In a column issued last July, Ueda warned against raising rates prematurely but said the BOJ must eventually consider how to exit its ultra-loose policy. The government's deputy governor nominees - former banking watchdog head Ryozo Himino and BOJ executive Shinichi Uchida - will testify in the afternoon after Ueda. The upper house of parliament will hold the confirmation hearing for Ueda on Monday, and that for the two deputies on Tuesday. Under YCC, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around 0% as part of efforts to sustainably achieve its 2% inflation target.

☆ Nearly half of Japan firms want BOJ to revise negative rate policy: Reuters poll
▼ + stars: | 2023-02-23 | by ( Rocky Swift | ) www.reuters.com time to read: +3 min

The government nominated academic Kazuo Ueda to head the Bank of Japan as the decade tenure of Governor Haruhiko Kuroda nears its close. Among nearly 500 major companies polled, 47% said the BOJ should modify policies that allow interest rates to go negative. Even so, a majority of companies, 62%, said a normalisation of monetary policy would not have a good or bad impact on their business. Asked to rate Kuroda's legacy at the central bank, respondents gave him middling to positive grades, overall. "There are pros and cons," a manager in the electronics industry said about the Kuroda BOJ.

☆ Japan government bond breaches yield cap, BOJ steps in with buying, loans
▼ + stars: | 2023-02-22 | by ( Junko Fujita | ) www.reuters.com time to read: +2 min

TOKYO, Feb 22 (Reuters) - Japan's 10-year government bond yield on Wednesday breached the top end of the Bank of Japan's policy band for a second straight session, prompting the central bank to step into the market with emergency bond buying and offering of loans. read moreThe yield on 10-year JGBs climbed to 0.505% on Wednesday, breaking through the central bank's 0.5% cap and marking its highest level since Jan. 18. The BOJ bought 300 billion yen ($2.2 billion) of Japanese government bonds with maturities of five to 10 years and 100 billion yen of bonds with maturities of 10 to 25 years. In its struggle to contain elevated yields, the BOJ bought a record 23.69 trillion yen ($175.69 billion) worth of government bonds in January. This would be the fourth time that BOJ provides such loans since last month after amending rules for its funds-supply operation.

☆ BOJ board member calls for keeping ultra-easy policy for now
▼ + stars: | 2023-02-22 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

A former commercial banker, Tamura repeated his view that the BOJ must at some point conduct a comprehensive assessment of its monetary policy framework by weighing the benefits of costs of current ultra-loose policy. "We're now in a phase where we need to scrutinise whether Japan can achieve a positive wage-inflation cycle. Under YCC, the BOJ guides short-term interest rates at -0.1% and the 10-year bond yield around zero as part of efforts to sustainably achieve its 2% inflation target. Tamura said the BOJ's decision in December was aimed at minimising the side-effects of YCC and making its monetary easing more sustainable, not at tightening policy. With the 10-year bond yield breaching the cap, the central bank said on Wednesday it would conduct emergency bond purchases to fend off a renewed market attack on YCC.

☆ Asia shares creep higher, wary on Fed and BOJ outlooks
▼ + stars: | 2023-02-20 | by ( Wayne Cole | ) www.reuters.com time to read: +4 min

All of which made for a cautious start and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) nudged up 0.7%, after sliding 2.2% last week. The bounce was led by Chinese blue chips (.CSI300) which firmed 1.1% as Beijing kept interest rates steady as expected, having already poured liquidity into the banking system in recent days. CORE PCE A RISKMinutes of the Fed's latest meeting due on Wednesday should add colour on the deliberations, though they have been superseded somewhat by barnstorming numbers on January payrolls and retail sales. The Fed's favoured inflation indicator, the core PCE index, is seen rising 0.4%, the biggest gain in five months, while the annual pace may have slowed just a fraction to 4.3%. There are also at least five Fed presidents speaking this week, to provide running commentary.

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