Financial Times (January 14)
“Since the Bank of Japan stunned markets by widening the band of its yield curve control (YCC) policy on December 20, markets feel things are now moving tectonically for one of the developed world’s most unorthodox financial regimes.” At long last, the ‘widow-maker’ trade “is making money. On Friday and for the first time in almost a decade, yields on the benchmark 10-year JGB rose to 0.53 per cent and, critically, outside the BoJ’s target band in defiance of its ever more desperate efforts to fight the market.”
Tags: 10-year, Benchmark, BOJ, Control, Defiance, Desperate, Financial regimes, JGB, Markets, Target band, Widow-maker trade, Yield curve, Yields
Wall Street Journal (January 10)
“Based on the growth of the money supply, Japan clearly fails to qualify as ultra-loose. On the contrary, it has been ultra-tight for decades.” Based on the quantity theory of money and Milton Friedman’s insights, “that tightness put Japan right where anyone… would expect: with ultra-low inflation.” That’s right, “Japan’s ultra-low inflation rates have been the result of ultra-tight, not ‘ultra-loose,’ monetary policy. The Bank of Japan’s attraction to this fallacy has resulted in Japan’s lost decades.”
Tags: BOJ, Fallacy, Friedman, Growth, Japan, Lost decades, Monetary policy, Money supply, Rates, Ultra-loose, Ultra-low inflation, Ultra-tight
Bloomberg (December 20)
“It is hard to overemphasize the importance of” the BOJ’s latest “policy change. Starved of yield domestically and with the yen on a vicious weakening trend, Japanese investors have turned to bond markets elsewhere where yields are higher…. This change in policy is likely to make the yen much less of a one-way bet.”
Tags: BOJ, Bond markets, Importance, Investors, Japan, Policy change, Weakening trend, Yen, Yield
The Economist (August 20)
The Bank of Japan expects “prices will rise by 2.3% in the current fiscal year. That would be the first time prices outstrip the bank’s 2% target since it was introduced in 2013, excluding the impact of sales-tax hikes. The covid-19 pandemic and commodity shocks from the war in Ukraine seem to have done what years of loose monetary policy could not.”
Tags: 2.3%, 2013, BOJ, Commodity, COVID-19, Pandemic, Prices, Rise, Sales-tax hikes, Shocks, Target, Ukraine, War
Financial Times (July 4)
“If the BoJ sticks to its guns while the US Federal Reserve continues to raise interest rates, the yield divergence could spell a further collapse in the yen beyond the 24-year low. But if the BoJ moves to tweak its monetary policy, or if a global recession prompts a U-turn in US interest rates and a flight to safe havens, it could trigger an abrupt reversal.”
Tags: 24-year low, BOJ, Collapse, Divergence, Global recession, Interest rates, Japan, Monetary policy, Reversal, Safe havens, U.S.. Fed, Yen, Yield
Bloomberg (June 8)
“It’s not like inflation is out of control in Japan. Far from it. Consumer prices rose 2.1% in April from a year earlier, finally reaching the BOJ’s target.” Nevertheless, “after a generation of ultra-low prices, Kuroda may not have appreciated how hard it is for Japanese to embrace something they haven’t had to deal with.” In April, fresh fish and vegetables rose by 12%, “including a nearly 100% increase in the cost of onions. Talk about eye watering.” The BOJ has worked for nearly three decades “to crank up inflation from dangerously low levels. How galling that Japan may not even want it.”
Tags: BOJ, Consumer prices, Dangerously low, Eye watering, Fish, Galling, Inflation, Japan, Kuroda, Onions, Vegetables
Reuters (April 1)
In March, the Japanese yen “lost around 8% against the dollar… dropping to a six-year low below 125 on Monday.” Some believe that level “raises alarm among Japanese authorities, as a previous drop to that level triggered verbal warnings by BOJ’s Kuroda.” However, in terms of the “real, effective exchange rate—an indicator that captures the international competitiveness of a currency,” the yen is performing even worse, having “slid to less than half” of 1995’s peak.
Tags: 1995, Alarm, Authorities, BOJ, Currency, Dollar, Effective exchange rate, Indicator, International competitiveness, Japan, Kuroda, Low, March, Verbal warnings, Yen
Reuters (April 29)
“There’s an end to everything except, apparently, central bankers’ creativity. Virus-damaged economies will need lots of help to heal, and more downturns are inevitable in the future. The monetary-policy bigwigs will keep coming up with more new ways to stimulate growth.” The Fed and BoE may “eventually overcome their aversion to negative interest rates” and/or “copy Bank of Japan chief Haruhiko Kuroda’s yield-curve control policy of targeting specific levels for 10-year government bond yields.”
Tags: BOE, BOJ, Creativity, Damaged, Downturns, Economies, Fed, Growth, Heal, Kuroda, Monetary policy, Negative interest, Virus, Yield curve
Reuters (May 16)
“Years of heavy money printing by the BOJ have pushed down long-term interest rates near zero, adding to a squeeze on margins for Japan’s regional banks already suffering from a dwindling population and weak loan demand.”
Tags: BOJ, Dwindling population, Interest rates, Japan, Loan demand, Margins, Money supply, Regional banks
Reuters (July 29)
“The Bank of Japan meets on Tuesday and might be doing some ‘jinarashi’ i.e. preparing markets for some changes to its unique, ultra-loose monetary policy.” With five years of mixed results, as well as “a global trade war now threatening trouble for its big exporters and zero interest rates hurting its banks, the BOJ seems to have recognized that something needs to give.”
Tags: BOJ, Exporters, Global trade war, Japan, Jinarashi, Mixed results, Monetary policy, Ultra-loose, Zero interest rates
