Reuters (August 22)
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.
Tags: BOJ, Complexities, Deflation, Delay, Economy, Hobbled, Inflation, Japan, Policymakers, Recovery, Respondents, Survey, Unrealistic
Bloomberg (August 14)
“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.”
Tags: Central bank, Economists, Economy, Inflation, Japan. Growth, Labor market, Monetary stimulus, Profits, Wage gains, Yen
Bloomberg (July 18)
“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
Tags: Asset purchases, BOJ, ETFs, Fast Retailing, Free float, Inflation, Japan, JGBs, Monetary stimulus, Negative interest rates, Risks, Yield curve control
Reuters (April 27)
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.”
Tags: Analysts, BOJ, Economy, Expansion, Household spending, Inflation, Momentum, Recovery, Wage growth
Euromoney (March 24)
“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.”
Tags: Constitutional crisis, Economy, Erosion, Gilts, Inflation, Political risk, Purchasing power, Stagflation, Sterling, Suffering, U.K.
Bloomberg (November 10)
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.”
Tags: BOJ, Central banks, ETF, Fiscal policy, Global financial crisis, Growth, Inflation, Monetary policy, Nikkei, Shareholder, Zero lower bound
The Economist (July 30)
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.”
Tags: Abenomics, Inflation, Japan, Labor market, Public debt, Reform, Three arrows
Financial Times (June 7)
“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.”
Tags: Borrowers, Debt, Default, Demographics, Elderly, Governments, Inevitable, Inflation, Public sector, Savers
Bloomberg (May 16)
“Never before has the Bank of Japan done so much to achieve so little. Even after arranging a record stimulus program and reducing a key interest rate to less than zero, the central bank has failed to boost inflation to its goal of 2 percent…. A central bank using up its policy tools doesn’t bode well for a nation with the world’s largest debt burden.”
Tags: BOJ, Central bank, Debt burden, Goal, Inflation, Interest rate, Policy tools, Stimulus
Financial Times (May 2)
More needs to be done on fiscal and monetary co-operation. “The past few weeks have highlighted the limits of monetary policy expansion. The current framework combining quantitative easing and negative interest rates is offering rapidly diminishing returns because it is not producing the large, permanent increase in the money in circulation that would be required to turn inflation expectations around and lift the world economy out of deflationary deadlock.”
Tags: Cooperation, Deflationary deadlock, Diminishing returns, Economy, Expansion, Expectations, Fiscal, Inflation, Limits, Monetary, Negative interest rates, Quantitative easing
