The Bank of Japan (BOJ) yesterday expanded stimulus by doubling purchases of exchange-traded funds (ETF), yielding to pressure from the Japanese government and financial markets for bolder action, but disappointing investors who had set their hearts on more audacious measures.
However, the central bank said it would conduct a thorough assessment of the effects of negative interest rates and its massive asset-buying program, suggesting that a major overhaul of its stimulus program might be forthcoming.
At the two-day rate review that ended yesterday, the BOJ decided to increase ETF purchases so its total holdings increase at an annual pace of ¥6 trillion (US$58 billion), up from the current ¥3.3 trillion. The decision was made by a 7-2 vote.
Photo: AP
However, it maintained its base money target at ¥80 trillion, as well as the pace of purchases for other assets including Japanese government bonds.
It also left unchanged the 0.1 percent interest it charges to a portion of excess reserves financial institutions park with the central bank.
The US dollar yesterday fell more than ¥1 at one point to as low as ¥102.825 and the Nikkei average tumbled nearly 2 percent, after the BOJ’s decision fell short of expectations.
“The BOJ did not live up to expectations,” Mizuho Securities senior economist Norio Miyagawa said. “Increasing ETF purchases makes no contribution to achieving 2 percent inflation. The BOJ won’t admit it, but it has reached the limits of quantitative easing and negative rates.”
By coordinating its action with the government’s promised US$272 billion economic stimulus spending package, the BOJ likely aimed to maximize the effect of its measures on the world’s third-biggest economy, which is struggling to escape decades of deflation.
“Japan is conducting a powerful mix of flexible fiscal policy and quantitative easing,” BOJ Governor Haruhiko Kuroda told a news conference after the decision. “The government’s stimulus package helps reinforce this drive and is timely in achieving sustainable growth with price stability.”
The BOJ maintained its rosy inflation forecasts for fiscal 2017 and 2018 in a quarterly review of its projections. It also left intact the time frame for hitting its price growth target, but warned uncertainties could cause delays.
“Japan’s economy may see the pace of recovery slow for a while due to some weakness in exports and output,” Kuroda said. “But it is then expected to continue expanding above its potential growth rate and expand moderately as a trend, with rising income driving spending among companies and households.”
Worried about their dwindling policy options, some BOJ policymakers have expressed doubts over the feasibility of expanding an already massive stimulus program that has failed to boost inflation.
Such concerns might be addressed when the BOJ conducts an assessment of the effect of its current policies at its next rate review on Sept. 20 to Sept. 21.
Some analysts said the review could lead to more radical steps being proposed.
“What’s noteworthy is that the BOJ has promised to review the effects of its policy at its next meeting, keeping alive expectations of further easing,” Bank of America Merrill Lynch chief Japan currency strategist Shunsuke Yamada said. “This makes the next meeting very important. The yen is likely to be volatile until then.”
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last