There's no limits to what a central bank can do
Bank of Japan Governor Haruhiko Kuroda said there were "no limits" to what the central bank can do if it saw the need to adjust monetary policy in the future, signaling readiness to expand stimulus further if risks threatened its price target.
Haruhiko Kuroda
Kuroda, in an interview with Japan's Jiji news agency conducted on Thursday, said the country was moving steadily toward achieving the BOJ's 2 percent inflation target with no big risks to the outlook for now.
But he added that external risks "must be watched carefully" given recent volatile market moves that reflected overseas developments such as the escalating tension in Ukraine.
The BOJ offered an intense burst of monetary stimulus in April last year, pledging to buy assets aggressively to accelerate consumer inflation to 2 percent in roughly two years in a country mired in deflation for 15 years.
It has stood pat since then despite market expectations of additional stimulus to cushion the impact from a sales tax hike that will take effect in April. It has argued that the current ultra-loose policy was enough to keep the economy on track to meet the price target.
Kuroda said what was most important was to achieve the 2 percent price target at an early date, according to Jiji, suggesting that the BOJ was ready to act if meeting the target became difficult.
He also said it was "not as if there weren't any steps left" for the BOJ to take if it were to ease again, countering views held by some market participants that having delivered a massive stimulus last year, the BOJ had no tools left to deploy.
On specific steps the BOJ could take if it were to act again, Kuroda said only that that depended on economic and price developments at the time, according to Jiji.
Some market participants speculate the BOJ, despite its upbeat economic and price forecasts, may try to surprise markets by acting quickly and pre-emptively. Kuroda countered that view too, saying he wasn't feeling pressure to "outwit" markets.
Bank of Japan Governor Haruhiko Kuroda said there were "no limits" to what the central bank can do if it saw the need to adjust monetary policy in the future, signaling readiness to expand stimulus further if risks threatened its price target.
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| Haruhiko Kuroda |
Kuroda, in an interview with Japan's Jiji news agency conducted on Thursday, said the country was moving steadily toward achieving the BOJ's 2 percent inflation target with no big risks to the outlook for now.
But he added that external risks "must be watched carefully" given recent volatile market moves that reflected overseas developments such as the escalating tension in Ukraine.
The BOJ offered an intense burst of monetary stimulus in April last year, pledging to buy assets aggressively to accelerate consumer inflation to 2 percent in roughly two years in a country mired in deflation for 15 years.
It has stood pat since then despite market expectations of additional stimulus to cushion the impact from a sales tax hike that will take effect in April. It has argued that the current ultra-loose policy was enough to keep the economy on track to meet the price target.
Kuroda said what was most important was to achieve the 2 percent price target at an early date, according to Jiji, suggesting that the BOJ was ready to act if meeting the target became difficult.
He also said it was "not as if there weren't any steps left" for the BOJ to take if it were to ease again, countering views held by some market participants that having delivered a massive stimulus last year, the BOJ had no tools left to deploy.
On specific steps the BOJ could take if it were to act again, Kuroda said only that that depended on economic and price developments at the time, according to Jiji.
Some market participants speculate the BOJ, despite its upbeat economic and price forecasts, may try to surprise markets by acting quickly and pre-emptively. Kuroda countered that view too, saying he wasn't feeling pressure to "outwit" markets.
Is there a Chinese Cooldown?
China’s economy slowed markedly in the first two months of the year, with growth in investment, retail sales and factory output all falling to multi-year lows, a surprisingly weak performance that raises the spectre of a sharper cooldown.
The weaker-than-expected data is bound to amplify global investors’ worries about slackening growth in the world’s second-largest economy, and will almost certainly feed speculation that Beijing may loosen policies soon to bolster growth.
China’s industrial output rose 8.6 per cent in the first two months of 2014 from a year earlier, the National Bureau of Statistics said today, missing market expectations for a 9.5 per cent rise.
That marked the worst performance for China’s factory output growth since April 2009. “Policy easing should be imminent,” said Hao Zhou, an economist at ANZ Bank in Shanghai, adding that Thursday’s data implied that China’s economy may grow 7 per cent in the first quarter.
Sources earlier this week suggested that China’s central bank is prepared to take its strongest action since 2012 to loosen monetary policy if economic growth slows further, by cutting the amount of cash that banks must keep as reserves.
A cut would be triggered if growth slips below 7.5 per cent and towards 7.0 per cent, and would be expected only in the second quarter, according to the sources who are involved in internal policy discussions.
Other sectors of the economy also appeared to have lost steam. Growth in retail sales was the slowest in three years, up 11.8 per cent in January and February compared to the year-ago period. Analysts had expected a rise of 13.5 per cent. Fixed-asset investment, an important driver of economic activity, fared even worse. It was up 17.9 per cent in the first two months from the same period last year, a level unseen in 11 years and some way below forecasts for a 19.4 percent increase.
Asian stock markets and most regional currencies such as the Australian dollar and China’s offshore yuan pared early gains after the data was released.
The statistics bureau released combined data for January and February in a bid to reduce distortions seen in single-month data caused by the timing of the Lunar New Year holidays, when factories, offices and shops often close for long periods.
Trade data last week showed January-February exports fell 1.6 per cent from the same period a year earlier, and tumbled 18.1 per cent in February alone, alarming financial markets.
Many analysts believe Beijing will not consider further easing until more months of data are available. But even accounting for holiday-related shutdowns and distortions, the broader weaker trend so far in 2014 appears clear.
China’s government, which wrapped up its annual parliament meeting today, had said last week that it aims to grow the economy by 7.5 per cent this year. But with growth appearing to drop faster and sharper than what many have expected, some economists believe that China may actually miss its growth target this year for the first time in years.
Reuters
The weaker-than-expected data is bound to amplify global investors’ worries about slackening growth in the world’s second-largest economy, and will almost certainly feed speculation that Beijing may loosen policies soon to bolster growth.
BOJ continue to slosh out the cash but looks like no change
The yen edged up on Tuesday after the Bank of Japan stood pat on monetary policy and its chief, Haruhiko Kuroda, said there was no need to adjust monetary policy for now.
The BoJ maintained its massive monetary stimulus, as widely expected, and stuck to its view that economic growth and consumer price increases remain on track. It downgraded its view of exports but upgraded its view of capital expenditure and industrial production.
"Dollar/yen has been in a range between 101-104 yen for much of this year, and the yen needs a fresh trigger for the next leg of weakness," said Peter Kinsella, currency strategist at Commerzbank. "That could come from a steady deterioration in Japan's trade and current account deficits."
The BoJ's next meeting on April 30 comes after a sales tax increase scheduled to take effect on April 1. The central bank will also release its semi-annual economic outlook then, which investors say could give it an opportunity to alter its outlook and justify a policy move.
Data on Monday underscored the recovery remains fragile. Japan posted a record current account deficit in January, and its fourth-quarter gross domestic product growth was revised down, suggesting the effects of BoJ easing might have begun to wane.
We need to look convincing-Deflation is a mindset as well
The Bank of Japan must try harder to convince the public it can spur faster price increases, a Japanese central banker said in a speech that acknowledged it could be some time before the institution achieves its inflation goal.
BOJ continue to slosh out the cash but looks like no change
The yen edged up on Tuesday after the Bank of Japan stood pat on monetary policy and its chief, Haruhiko Kuroda, said there was no need to adjust monetary policy for now.
The BoJ maintained its massive monetary stimulus, as widely expected, and stuck to its view that economic growth and consumer price increases remain on track. It downgraded its view of exports but upgraded its view of capital expenditure and industrial production.
"Dollar/yen has been in a range between 101-104 yen for much of this year, and the yen needs a fresh trigger for the next leg of weakness," said Peter Kinsella, currency strategist at Commerzbank. "That could come from a steady deterioration in Japan's trade and current account deficits."
The BoJ's next meeting on April 30 comes after a sales tax increase scheduled to take effect on April 1. The central bank will also release its semi-annual economic outlook then, which investors say could give it an opportunity to alter its outlook and justify a policy move.
Data on Monday underscored the recovery remains fragile. Japan posted a record current account deficit in January, and its fourth-quarter gross domestic product growth was revised down, suggesting the effects of BoJ easing might have begun to wane.
We need to look convincing-Deflation is a mindset as well
The Bank of Japan must try harder to convince the public it can spur faster price increases, a Japanese central banker said in a speech that acknowledged it could be some time before the institution achieves its inflation goal.
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| Sayuri Shirai |
"The Bank needs to increase its dialogue with the public to promote understanding of the importance of the 2 percent target," Sayuri Shirai, a member of the Bank of Japan's policy board, said at a monetary policy conference on Friday.
Japan is engaged in a monumental campaign to revitalize an economy plagued by years of stagnant growth and falling prices. The Japanese central bank is playing a pivotal role in the effort, engaging in massive money printing in a bid to reverse the nation's deflationary mindset.
Shirai said it could take some time to get inflation to 2 percent. "It is possible that it may take even longer to achieve a situation where the 2 percent target is maintained in a stable manner," she said.
She said there have been some signs that the public is adopting higher expectations for inflation, which would be a major accomplishment for the central bank, but that some of the increase was due to the impact of a looming tax hike.
This means the Bank of Japan has work to do to convince the public that it will spur higher inflation.
"Maybe some people still have some doubt about our commitment," Shirai said during a panel discussion following her remarks.
BOJ-the Fed turning off the taps is a good thing, but we'll keep sloshing it out
Bank of Japan Governor Haruhiko Kuroda said on Saturday the fact the Federal Reserve is tapering its massive stimulus programme underscores the strength of the U.S. economy, which is positive for emerging economies and for global growth in the long-term.
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| Bank of Japan Governor Haruhiko Kuroda |
He also said the G20 finance leaders gathering in Sydney over the weekend will discuss recent market volatility that has hit some emerging economies.
"As for us, we'll explain how our qualitative and quantitative easing is making initial success, and how Japan is making steady progress toward our 2 percent price target," Kuroda told reporters.
The BOJ has maintained its huge monetary stimulus deployed in April last year, which aims to accelerate consumer inflation to 2 percent in roughly two years via aggressive asset purchases in a country mired in deflation for 15 years.
Inflation falls in India but will it hamper growth
India’s consumer-price growth eased more than analysts estimated in January and factory output fell in December following an increase in interest rates as central bank Governor Raghuram Rajan fights Asia’s fastest inflation.
The consumer-price index rose 8.79 percent from a year earlier, compared with 9.87 percent in December, the Statistics Ministry said in New Delhi yesterday.
Rajan pledged to fight inflation and preserve the value of the rupee when he boosted borrowing costs last month as the U.S. reduced monetary stimulus. Higher rates have taken a toll on consumer demand, with another report yesterday showing industrial output shrank 0.6 percent in December.
“There is no relief until the inflation rate reaches 8 percent,” said Indranil Pan, a Mumbai-based economist at Kotak Mahindra Bank Ltd. “The RBI will look at inflation on the whole, and this fall does not impact their stated position.”
The rupee, down about 13 percent versus the dollar in the past year, strengthened 0.2 percent to 62.11 per dollar in Mumbai yesterday. The S&P BSE Sensex (SENSEX) index advanced 0.4 percent. The yield on the government bond due November 2023 rose to 8.81 percent from 8.74 percent on Feb. 11. The data were published after the close of trading.
The MSCI Emerging Markets Index has lost about 5 percent this year. India, Brazil, Indonesia,South Africa, and Turkey are “among the economies that appear to have been the most affected” by the sell-off, according to a report presented to the congressional committee.
"Curbing inflation is crucial to attaining faster growth rates", Rajan said. Inflation in food, beverages, and tobacco, which account for about half of the consumer-price index’s basket of goods and services, exceeded 12 percent in December. It was 9.9 percent in January, the Statistics Ministry report showed.
A central bank panel in January proposed reducing CPI to 8 percent within one year and 6 percent by 2016, and that the RBI should then adopt a 4 percent target with a band of plus or minus two percentage points. Further tightening isn’t anticipated in the near term if consumer inflation slows to 8 percent by early 2015, the central bank said Jan. 28.
India forecasts its economy will expand 4.9 percent in the 12 months through March 31, faster than the decade-low expansion of 4.5 percent last year, the statistics ministry said last week. If inflation slows, Asia’s third-biggest economy can grow between 5 percent and 6 percent in the fiscal year starting April 1, the RBI predicts.
Prime Minister Manmohan Singh said last month his government could’ve done a better job at controlling inflation after the Congress Party got trounced in state elections. Opinion polls show the main opposition Bharatiya Janata Party winning the most seats in national polls due by May while falling short of a majority.
Standard & Poor’s warned in November that India’s credit rating may be cut to junk unless the election leads to a government capable of reviving growth.
India’s consumer-price growth eased more than analysts estimated in January and factory output fell in December following an increase in interest rates as central bank Governor Raghuram Rajan fights Asia’s fastest inflation.
The consumer-price index rose 8.79 percent from a year earlier, compared with 9.87 percent in December, the Statistics Ministry said in New Delhi yesterday.
Rajan pledged to fight inflation and preserve the value of the rupee when he boosted borrowing costs last month as the U.S. reduced monetary stimulus. Higher rates have taken a toll on consumer demand, with another report yesterday showing industrial output shrank 0.6 percent in December.
“There is no relief until the inflation rate reaches 8 percent,” said Indranil Pan, a Mumbai-based economist at Kotak Mahindra Bank Ltd. “The RBI will look at inflation on the whole, and this fall does not impact their stated position.”
The rupee, down about 13 percent versus the dollar in the past year, strengthened 0.2 percent to 62.11 per dollar in Mumbai yesterday. The S&P BSE Sensex (SENSEX) index advanced 0.4 percent. The yield on the government bond due November 2023 rose to 8.81 percent from 8.74 percent on Feb. 11. The data were published after the close of trading.
The MSCI Emerging Markets Index has lost about 5 percent this year. India, Brazil, Indonesia,South Africa, and Turkey are “among the economies that appear to have been the most affected” by the sell-off, according to a report presented to the congressional committee.
"Curbing inflation is crucial to attaining faster growth rates", Rajan said. Inflation in food, beverages, and tobacco, which account for about half of the consumer-price index’s basket of goods and services, exceeded 12 percent in December. It was 9.9 percent in January, the Statistics Ministry report showed.
A central bank panel in January proposed reducing CPI to 8 percent within one year and 6 percent by 2016, and that the RBI should then adopt a 4 percent target with a band of plus or minus two percentage points. Further tightening isn’t anticipated in the near term if consumer inflation slows to 8 percent by early 2015, the central bank said Jan. 28.
India forecasts its economy will expand 4.9 percent in the 12 months through March 31, faster than the decade-low expansion of 4.5 percent last year, the statistics ministry said last week. If inflation slows, Asia’s third-biggest economy can grow between 5 percent and 6 percent in the fiscal year starting April 1, the RBI predicts.
Prime Minister Manmohan Singh said last month his government could’ve done a better job at controlling inflation after the Congress Party got trounced in state elections. Opinion polls show the main opposition Bharatiya Janata Party winning the most seats in national polls due by May while falling short of a majority.
Standard & Poor’s warned in November that India’s credit rating may be cut to junk unless the election leads to a government capable of reviving growth.
Lackluster growth of Asia means the BOJ will continue printing
The Bank of Japan stands ready to expand monetary stimulus further if necessary to safeguard its inflation mandate, two top policymakers said on Thursday, warning that the rout in emerging markets was already affecting Japanese assets.
Deputy Governor Kikuo Iwata dismissed the chance
of an immediate expansion of monetary stimulus, stressing that solid U.S. growth will underpin global demand and keep the world's third-largest economy on track for a moderate recovery.
"I am not too worried about the U.S. economy and therefore in terms of Japan's monetary policy I think we can stick to our existing policy," he told a news conference after meeting with business leaders in Miyazaki, southern Japan
The Bank of Japan stands ready to expand monetary stimulus further if necessary to safeguard its inflation mandate, two top policymakers said on Thursday, warning that the rout in emerging markets was already affecting Japanese assets.
Deputy Governor Kikuo Iwata dismissed the chance
of an immediate expansion of monetary stimulus, stressing that solid U.S. growth will underpin global demand and keep the world's third-largest economy on track for a moderate recovery.
"I am not too worried about the U.S. economy and therefore in terms of Japan's monetary policy I think we can stick to our existing policy," he told a news conference after meeting with business leaders in Miyazaki, southern Japan
But the former academic, echoing concerns expressed by Governor Haruhiko Kuroda that lackluster growth in emerging Asia is weighing on exports, stressed the BOJ's readiness to act should external risks undermine its inflation target.
BOJ let the cash flow in a bid to finally stamp out deflation
The Bank of Japan refrained from boosting unprecedented easing as accelerating inflation marks progress in its bid to stamp out 15 years of deflation in Asia’s second-biggest economy.
The Bank of Japan refrained from boosting unprecedented easing as accelerating inflation marks progress in its bid to stamp out 15 years of deflation in Asia’s second-biggest economy.
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| Haruhiko Kuroda 黒田 東彦 Governor of the Bank of Japan |
Gov. Haruhiko Kuroda’s board stuck to its pledge to expand the monetary base by an annual ¥60 trillion to ¥70 trillion on Wednesday after a two-day meeting in Tokyo.
The BOJ maintained its forecast that core consumer prices will rise 1.9 percent in the year starting April 2015, excluding the effect of sales-tax increases, and scrapped a reference to the economy facing “uncertainty.”
With the BOJ’s preferred inflation gauge at more than half of its target 2 percent pace, analysts from HSBC Holdings Plc. to Daiwa Securities Co. have pushed back forecasts for when the central bank may add to easing. Kuroda’s policy makers may wait to assess trends in wages and the effects of the sales-tax increase in April before deciding on any extra stimulus.
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