Bank of Japan

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BoJ preview: a still negative neutral rate calling for pause notwithstanding weak Yen

Alicia García Herrero (Natixis) | After the Bank of Japan (BoJ) terminated the key non-conventional monetary policy tools in March, namely the negative policy rate and the yield curve control (YCC), evidence on a strengthening virtuous circle between inflation and wages has been limited. However, real wages -which fell by -1.8% year-on-year in February – are unlikely to turn positive soon. Furthermore, services inflation excluding imputed rent softened to +2.9%…

bank of japan

BoJ turning to a swifter exit, pushed by further delays in Fed cuts

Alicia García Herrero (Natixis)| The Bank of Japan (BoJ) has been in the limelight since major central banks in the world, as specially in Fed, started hiking rates. For months, as Japan began to see a rapid increase in inflation, financial markets started to put depreciating pressure on the Yen and upward pressure on the yield of Japanese Government Bonds (JGBs), capped by the Yield Curve Control (YCC) introduced by…

bank of japan

Increasingly nervous BoJ due to overly weak Yen still not expected to move at October meeting

Alicia García Herrero | The Bank of Japan (BoJ) is in the spotlight once again. While the crisis in the Middle East deepens, higher oil prices have lifted the US 10-year Treasury yield beyond 5% although it has retrenched a little once again. At the same, the 10-year JGB yield is capped by the BoJ’s Yield Curve Control (YCC) at 1%. On the back of a further widening interest rate…

bank of japan

Notwithstanding improvement in margins and wages for large companies, BoJ to wait until it completes its monetary review

Alicia García Herrero (Natixis) | The Bank of Japan (BoJ) has begun to highlight the rising inflation bias. At the Lower House, Governor Ueda testified on June 9th that corporate price-setting behavior has been shifting upward. Furthermore, as the spring wage negotiation resulted in the largest wage increase in 30 years, inflation could surprise on the upside.Price transfer of higher input costs has become broad based. For sure, small companies,…

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Negative Rates – Naughty Or Nice?

UBS | The Bank of Japan has now fearlessly (sort of fearlessly) embraced negative interest rates. The negative rates will not be comprehensively applied in Japan, but yet another central bank has broken through zero. Rates are, or have been, negative in Japan, the Euro area, Switzerland, Sweden and Denmark. From an economic point of view what does this mean? There are good and bad aspects to negative interest rates.