The Bank of Japan (BoJ) yesterday slashed its annual inflation forecast and once again delayed its timetable for hitting a 2 percent target as the economy struggles to gain traction despite years of stimulus.
Central bankers also decided to maintain the bank’s ultra-loose monetary policy at a time when their counterparts in other major economies from the Americas to Europe consider ending the era of cheap cash.
Investors were relieved over the bank’s decision. Tokyo’s benchmark Nikkei 225 index rose 0.62 percent, or 123.73 points, to end at 20,144.59, while the TOAX of all first-section issues gained 0.69 percent, or 11.14 points, to 1,633.01.
The yen fell against other major currencies, a plus for Japanese exporters.
“Yenselling accelerated following the announcement as the delay in [achieving] the inflation target generally means the BoJ would have to continue its easing in sharp contrast to other major central banks moving to tightening,” said Tomohiro Nishida, a dealer at Sumitomo Mitsui Trust Bank Ltd.
The US dollar climbed to ¥112.12 yesterday afternoon from ¥111.84 in New York on Wednesday.
The central bank said it now expects the core consumer price index to rise 1.1 percent in the year to March, down from its April estimate of 1.4 percent, while its March 2019 prediction was cut to 1.5 percent from 1.7 percent.
In a statement after the policy meeting the bank also said it now expects to achieve the 2 percent objective sometime in the year to March 2020.
Officials had in 2013 set a two-year time line when unveiling the bank’s massive monetary easing program as part of Japanese Prime Minister Shinzo Abe’s push to kick-start growth in the world’s third-largest economy.
“The BoJ has already pushed out the time line several times. Now four years have passed and there is no sign the inflation rate is rising,” Masaaki Kanno, chief economist at Sony Financial Holdings Inc in Tokyo and a former BoJ official, told Bloomberg TV.
However, the bank did lift its economic growth outlook to 1.8 percent for the current fiscal year from its previous estimate of 1.6 percent. It also hiked its fiscal 2018 outlook by 0.1 percentage point to 1.4 percent.
Analysts were skeptical about whether the BoJ would achieve its goals.
“Even after today’s downward adjustments, the bank’s inflation forecasts for the current fiscal year remain too high and there is little chance of hitting the 2 percent target next year either,” Capital Economics Ltd economist Marcel Thieliant, said in a commentary. “The upshot is that we expect the bank to leave policy settings unchanged for the foreseeable future.”
Government and central bank officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for failure to achieve the target.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts