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Investment Week (November)

2017/ 11/ 30 by jd in Global News

The recent 0.25% increase “in interest rates announced by the Bank of England leaves us with no more clarity about the direction of monetary policy than we had before the micro-adjustment. Indeed, the increase raises rather more questions than it resolves.” The cut may simply reverse “the rather ill-judged post referendum cut,” Or it could be one off “nod to those worried about inflation becoming more embedded.” Or it could be “the start of a sequence that will see regular increases in rates along a path towards normalisation.”

 

The Economist (November 2)

2017/ 11/ 03 by jd in Global News

“On some measures, Japan’s labour market is as tight as it has been since the 1970s. America’s jobless rate, at 4.2%, is the lowest for over 16 years. Inflation has nevertheless been surprisingly weak. In other words, the trade-off between unemployment and inflation, known as the Phillips curve, has become less steep.”

 

Reuters (August 22)

2017/ 08/ 24 by jd in Global News

Deflation “has hobbled Japan’s economy for nearly two decades, bedevilling policymakers despite drastic measures aimed at engineering a sustainable recovery.” For the sixth time, the Bank of Japan (BoJ) has delayed its 2% inflation target. This time until March 2020. Still, two-thirds of respondents in an August 1-16 Reuters Corporate Survey “saw the inflation goal as unrealistic,” with many of their responses further illustrating the complexities involved in overcoming deflation.

 

Bloomberg (August 14)

2017/ 08/ 16 by jd in Global News

“The last time Japan strung together this many quarters of growth was back in mid-2006…. The yen has fallen, corporate profits have soared and the economy is running above its potential growth rate. Yet inflation remains stubbornly low, despite massive monetary stimulus from the central bank. Economists are watching intently for signs that the tightest labor market in decades is beginning to bring wage gains.”

 

Bloomberg (July 18)

2017/ 07/ 20 by jd in Global News

“The growing focus on the risks associated with the BOJ’s monetary stimulus program—which includes enormous asset purchases, particularly of Japanese government bonds, as well as negative interest rates and yield curve control—comes as its inflation target remains elusive. With no end to its program in sight, the BOJ is under increasing pressure to mitigate risks and explain its thinking about an eventual exit.” Bloomberg calculated that the BOJ already owns over 70 percent of all shares in Japan-listed ETFs and could soon own most of the free float in companies like Fast Retailing.0000000000000

 

Reuters (April 27)

2017/ 04/ 28 by jd in Global News

For “the first time since March 2008 the BOJ used the word ‘expansion’ to describe the state of the economy, signaling its conviction that the recovery was gaining momentum.” Still, some “analysts doubt inflation will accelerate as quickly as the BOJ projects, with slow wage growth keeping households from boosting spending.”

 

Euromoney (March 24)

2017/ 03/ 26 by jd in Global News

“The UK economy seems at last to be suffering from the erosion of purchasing power by sterling-induced inflation. All of this smacks of stagflation, a constitutional crisis and rising political risk. UK gilts will suffer.”

 

Bloomberg (November 10)

2016/ 11/ 11 by jd in Global News

The Bank of Japan (BoJ) proved no match for the zero lower bound. “The Bank of Japan’s recent quarterly report says, in effect, that the central bank has done all it can do to raise growth and inflation, and that fiscal policy needs to step in and help.” The BoJ already “owns more than half of the ETF shares in the whole country” and is estimated to soon “be the biggest shareholder in 55 of the 225 companies in the Nikkei index.” Other central banks will follow Japan’s retreat. “The era of bold monetary policy experimentation that began with the global financial crisis is now drawing to a close.”

 

The Economist (July 30)

2016/ 08/ 01 by jd in Global News

When it comes to the three arrows of Abenomics, “the prevailing view is that none has hit home. Headline inflation was negative in the year to May. Japan’s public debt looks as bad as ever. In areas such as labour-market reform, nowhere near enough has been done.”

 

Financial Times (June 7)

2016/ 06/ 09 by jd in Global News

“Given today’s high level of public sector debt and worsening demographics, it is inevitable that governments will resort to soft forms of default, including inflation, to escape from their fiscal straitjacket. This is a world in which elderly savers will be condemned to subsidise borrowers for a long time.”

 

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