business

Markets may see BOJ policy tweaks as signaling change down the road

10 Comments
By Noriyuki Suzuki

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If there's a post covid "reflationary" boom, like many are predicting, the BOJ may finally see its 2% inflation target achieved!!

Still, I cant see the BOJ being all that "flexible" now that the Fed has committed itself to holding down its key short term rate at near zero rate for the next couple of years. The Japanese almost claim the privilege of having the lowest rates around.

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The rich just want to stay rich while the citizens eat cake.

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The BOJ may have secured some wiggle room to maneuver amid market perceptions that it is running out of ammunition to ease further. Years of bold monetary easing have not produced the intended result to fire up inflation toward a 2 percent goal.

The core consumer price index, excluding volatile fresh foods, will likely drop 0.5 percent in fiscal 2020 ending this month and rise only 0.5 percent in fiscal 2021, according to the latest BOJ projections.

The profound tragedy to the BOJ,banks and investors that the prices for foodstuffs have not inflated enough as many suffer from food deprivation during the pandemic.

It is these srt of policies that lead to agitation for a New Deal or a French Revolution.

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Japan has seen the boom days come and go!

If the Japanese cannot see an increase in wages then there isn’t going to be inflation.

I have noticed an increase in beggars in Kansai so things at the bottom look rough...

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The rich just want to stay rich while the citizens eat cake.

In other words 団子より花.

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If there had been substantive measures taken earlier such as significant increases in minimum wages then monetary policy could have been much more effective in raising growth and inflation. But I think those in charge, the haves, were quite content with the way things were going. Now, however, Japan is likely to face imported inflation and negative growth, and monetary tweaking will have ditto effect. Not good at all for those at the bottom.

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Michael Machida....The rich just want to stay rich while the citizens eat cake.

I think this is an exceedingly good idea!

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"...and monetary tweaking will have ditto effect. Not good at all for those at the bottom."

Ditto effect? The sentence would make more sense if it were written as: 'and monetary tweaks will have little effect', would it not?

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Years of bold monetary easing have not produced the intended result to fire up inflation toward a 2 percent goal.

But, the stock market is at 30 year highs, producing higher inequality! And the generational inequality created be abetting of the debt accumulation has increased significantly.

So not “Mission Accomplished”, but at least some have made out like bandits... the elderly and the Japanese stock owners.

Well the latter may have to watch out, if the BOJ ceases its purchases as suggested, or is perceived to have done so. Stocks down today?

"I do think the stimulus will shift more directly towards growth-oriented targets such as (supporting businesses for) digitalization and green growth."

This is not stimulus at all. Such central planning is the last thing the central bank should do (not even that... it should not do that at ever, and ideally the government would not either).

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They are stuck in a trap of their own devising. as are most of the other central banks in the world. every time they try to get out the market reacts and they panic and revert to this madness. Unless inflation really spikes and gives a path to maybe monetizing and inflating debt away, this is the new normal for forever.

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