As peers in the US and Europe take a dovish turn, Bank of Japan (BOJ) Governor Haruhiko Kuroda yesterday signaled he is unfazed as yields in his own country get caught up in the global shift.
“There is no need to be extremely and strictly mindful about a concrete range for the rate” on Japan’s benchmark 10-year bond yield, Kuroda said.
The BOJ targets that rate to be about 20 basis points plus or minus zero.
His flexibility egged on buyers, with the yield pushing as low as minus-0.18 percent as he spoke during an afternoon news conference.
The market is likely to test just how flexible Kuroda is in the days and weeks ahead.
The BOJ kept its benchmark interest rate at minus-0.1 percent and 10-year yield target at about 0 percent earlier in the day.
Hours before that, the US Federal Reserve followed the European Central Bank in signaling a willingness to cut rates in the face of rising threats to global growth.
Economists surveyed by Bloomberg unanimously forecast no change at yesterday’s BOJ meeting, but for the first time in more than two years, a majority had predicted the BOJ’s next policy move would be to increase stimulus.
Some expect action as early as next month.
Many BOJ watchers say Fed rate cuts, seen as increasingly likely, could force the BOJ’s hand by pushing the yen to what it would consider an uncomfortably strong level.
A stronger yen would hamper the BOJ’s efforts to hit 2 percent inflation.
Core inflation, to be released today, is expected to have fallen last month to 0.7 percent and is forecast to drop further in coming months.
The US dollar yesterday fell to as low as 107.47 versus the yen in Tokyo, paring losses after Kuroda’s news conference.
Again, Kuroda expressed comfort with taking a wait-and-see approach, saying that in the end, a Fed cut might not have much of an effect if the markets have already priced it in.
“At any rate, monetary policy isn’t targeted at foreign exchange rates,” he said.
Still, Kuroda reiterated that the BOJ stands ready to add stimulus if momentum toward its 2 percent inflation goal is threatened.
However, it is unlikely to be that simple, as the BOJ also faces concerns about the accumulation of side effects from six-plus years of radical stimulus.
Many economists doubt the BOJ could even have much impact with whatever it chooses to do, because its toolbox is almost empty — complicating the risk-reward scenario.
Japan’s trade-dependent economy showed some resilience in the first three months of the year, but some economists are warning of a contraction this quarter.
The BOJ still expects conditions to improve in the second half of the year.
Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Monday introduced the company’s latest supercomputer platform, featuring six new chips made by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), saying that it is now “in full production.” “If Vera Rubin is going to be in time for this year, it must be in production by now, and so, today I can tell you that Vera Rubin is in full production,” Huang said during his keynote speech at CES in Las Vegas. The rollout of six concurrent chips for Vera Rubin — the company’s next-generation artificial intelligence (AI) computing platform — marks a strategic
Enhanced tax credits that have helped reduce the cost of health insurance for the vast majority of US Affordable Care Act enrollees expired on Jan.1, cementing higher health costs for millions of Americans at the start of the new year. Democrats forced a 43-day US government shutdown over the issue. Moderate Republicans called for a solution to save their political aspirations this year. US President Donald Trump floated a way out, only to back off after conservative backlash. In the end, no one’s efforts were enough to save the subsidies before their expiration date. A US House of Representatives vote
REVENUE PERFORMANCE: Cloud and network products, and electronic components saw strong increases, while smart consumer electronics and computing products fell Hon Hai Precision Industry Co (鴻海精密) yesterday posted 26.51 percent quarterly growth in revenue for last quarter to NT$2.6 trillion (US$82.44 billion), the strongest on record for the period and above expectations, but the company forecast a slight revenue dip this quarter due to seasonal factors. On an annual basis, revenue last quarter grew 22.07 percent, the company said. Analysts on average estimated about NT$2.4 trillion increase. Hon Hai, which assembles servers for Nvidia Corp and iPhones for Apple Inc, is expanding its capacity in the US, adding artificial intelligence (AI) server production in Wisconsin and Texas, where it operates established campuses. This
US President Donald Trump on Friday blocked US photonics firm HieFo Corp’s US$3 million acquisition of assets in New Jersey-based aerospace and defense specialist Emcore Corp, citing national security and China-related concerns. In an order released by the White House, Trump said HieFo was “controlled by a citizen of the People’s Republic of China” and that its 2024 acquisition of Emcore’s businesses led the US president to believe that it might “take action that threatens to impair the national security of the United States.” The order did not name the person or detail Trump’s concerns. “The Transaction is hereby prohibited,”
RSS