The Bank of Japan (BOJ) yesterday left its stimulus settings unchanged at its final policy meeting of the year in the face of rising risks to inflation, just hours after the US Federal Reserve signaled a slightly more dovish rate path.
The bank kept its yield curve-control program and asset purchases unchanged, it said in a statement, a result predicted by all 49 economists surveyed by Bloomberg.
The Japanese central bank faces a deteriorating environment. With oil prices tumbling, economists see inflation falling toward zero in the year ahead.
Slowing growth in China, the US-China trade war and a disruptive Brexit could all hit Japan’s export-dependent economy, which has contracted in two of the past three quarters.
BOJ Governor Haruhiko Kuroda acknowledged that risks tilted to the downside, but said that Japan’s economic fundamentals remain solid and momentum toward the 2 percent price target is maintained.
Speaking at a news conference later, Kuroda also said that the bank has more tools for adding stimulus if needed — including rate cuts and asset purchases -—and that it is no problem if government bond yields fall into negative territory, so long as the move reflects economic fundamentals and yields remain within the bank’s target range.
Japanese stocks yesterday entered a bear market, with the TOPIX falling another 2.5 percent as statements from the BOJ and Fed failed to soothe investors.
Benchmark 10-year bond yields this week fell to 0.01 percent, the lowest since September last year.
While BOJ officials might be fine with yields hitting zero percent or below, sub-zero yields for an extended period would again elevate concerns about profits at Japanese banks. Eroded bank profitability was a key reason that the central bank introduced yield-curve control in 2016.
The bank repeated its previous assessment that Japan’s economy is likely to continue expanding moderately, supported by moderate growth in exports and an uptrend in domestic demand.
Core inflation is about 1 percent and likely to gradually increase toward 2 percent, it said.
“With a rising level of cautiousness, which was shared by the Fed, the BOJ will be in wait-and-see mode for a while,” said Junko Nishioka, chief Japan economist at Sumitomo Mitsui Banking Corp and a former BOJ official. “They are well aware that it’s not time to signal any policy normalization.”
The vote on the rate decision was 7-2, with Goushi Kataoka and Yutaka Harada dissenting.
Kataoka again said that heightening uncertainties regarding economic activity and prices warranted action to push long-term yields lower.
Harada said that the trading range for yields was too ambiguous a guide for market operations.
After more than five years and US$3.5 trillion of asset purchases, inflation remains only halfway to the BOJ’s goal, as wage growth remains stubbornly sluggish.
The Fed’s more cautious stance on future rate increases will complicate matters for the BOJ, which must be mindful that any clear signal of policy normalization, particularly if the Fed seems poised to hit pause, could cause the yen to quickly gain unwanted strength.
Compared with October, fewer economists this month expect tightening of policy next year, the Bloomberg survey found.
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
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
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