BoJ

Japanese's yen responds to global geopolitical uncertainty

Monetary Policy: Credibility 2.0

Francesco Saraceno | Is the last BoJ move a serious risk to blow credibility. If it failed to lift the inflation to the 2% target, how can it be credibly believed to overshoot it? Credibility was associated in the past three decades to changing incentives over time, and invoked to recommend rules over discretion. Today, eight years into the zero lower bound, we go back to a more intuitive definition of credibility: announcing an objective and not being able to attain it.


Japanese's yen responds to global geopolitical uncertainty

Japan Could Be First On The Market With Helicopter Money

Julius Baer Research | After last Thursday’s European Central Bank (ECB) meeting, the US Fed and the BoJ are due to report this week. Will these three heavy-weight central banks do whatever it takes to reflate the global economy? We believe definitely, yes, if reflation does not unfold as desired.


The Dragon’s Tail: What Would A 4% China Do To World’s Markets?

UBS | Our base case forecasts for China’s growth are already below consensus at 6.2% for 2016 and 5.8% for 2017. In this note we study the impact on global economies and assets of a much darker and, in our view, extremely unlikely scenario where China real GDP growth slips to 4%, and nominal growth below 1.5%.



No Picture

BoJ shocks markets; how about the economy?

By Kyohei Morita, Yuichiro Nagai, James Barber, and the CFA at Barclays |  The BoJ shocked the markets with further easing on Halloween. The actual effect on the economy will likely be less direct. The weaker JPY and lower real interest rates have not boosted export volumes and private capex since the start of QQE, and this may not change in the near future. However, consumer spending could draw support from wealth effects and higher wages linked to stronger exporter profits under JPY depreciation


Elevator QE

SAO PAULO | Marcus Nune’s Historinhas- Guest Post by Benjamin Cole | If you ever farted loudly on a crowded elevator, then you know the reaction of most economists to the idea that national debts should be monetized through central bank quantitative easing (QE), aka “printing money.”


G4 central banks expanded their balance sheets by $4Tr in 4 years

MADRID | The Corner | The size of the ECB’s private asset purchase plan is an enigma. According Mr Draghi, the central lender aims to bring its balance sheet to 2012 levels, that is,  from the current €2Tr to €3Tr (March 2012). Some analysts believe he went too far in Jackson Hole and the expansion shall not exceed €450bn (see chart above). Meanwhile, the G4 central lenders have increased their balance sheets in $4Tr since 2010- Only the BoJ continues to expand it at a rate of $650bn/year. And even if the Fed starts unwinding its stimulus program in October, if we add about €450bn annual from the ECB would liquidity would be increased by €1Tr.


Will the Bank of Japan act again?

MADRID | The Corner | Will the Japanese Central Bank act again to raise inflation expectations and get inflation to reach its target of 2%? Some analysts believe the BoJ should allow the economy to overheat a little in order to promote higher inflation expectations. “Kuroda is convinced that the country will reach its inflation target of 2% in the FY2015,” experts at JP Morgan pointed out on Thursday, “but the help of the yen’s depreciation is fading since expectations of further monetary expansion are lowering too.”


No Picture

Money is not long-run neutral or is the CFS’s “divisia” right?

SAO PAULO | By Benjamin Cole via Marcus Nunes’ Historinhas | One of the bromides of modern macroeconomics is that “long-term, money is neutral.” The above maxim makes sense on some levels. A nation is made rich or poor by its investment in infrastructure, education, farmland, factories, work ethics and the like. Running printing presses, per se, is meaningless.


No Picture

The Ying and Yang of Economic Policy

By David Denton | The Richter Scale  The UK QE has merely allowed the banks to off load UK government debt and replace this with other government debt, helping to keep bond prices high but having no impact on the real economy, other than to keep interest rates artificially low.