Bank of Japan hikes inflation forecast on soaring energy prices

So they finally got their inflation target. Where to from here?

BOJ is making the same mistake the Fed did - thinking inflation is only temporary and not rising. Wrong. Expect the yen to fall further.

Larr FlintToday  06:06 pm JST

I'm going to repeat same thing over and over again, sell your yen until you still can.

Next level 145-150

So?

When I arrived the bubble economy had just burst and the yen was around ¥140~145 to the USD.

During the best economic times in Japan the Yen was on average under ¥200 to the USD dollar.

So buying from outside gets expensive but it opens up a whole new possibilities in export markets.

¥100,000 yen items I have for sale locally are now around $780 USD a year ago it would have been over $900 USD and my cost haven't changed that much.

So now is time to push overseas sales.

A decade of money printing and weak economic fundamentals is devastating the yen.

Nope. Japan has been printing money like crazy over 20 years while the yen was strong and stable (remember 77 to the dollar?) , and the "fundaments" then and now haven't changed much. It's weak now because the Fed recently hiked, due in turn to the twin global supply shocks of covid and Ukraine.

So they finally got their inflation target.

No they haven't. That number is a forecast for the 2022-23 financial year.

Lots of strong opinions here based on a fundamental lack of knowledge.

The yen is in freefall as the J government do not know what to do. Japan is in a total crisis mode now. In any other country it would be goodbye LDP

At least everybody I know holds the absolute bare minimum of their money in the poison yen.

Governments like to put everything on the Ukraine War, How convenient!

A decade of money printing and weak economic fundamentals is devastating the yen. Looks like a possible financial crisis and stagflation in the pipeline if they don't take action. Doing more of the same will only result in more of the same.

Economic theory is failing.

More like over 300, thought it was higher in the 70's

Nice try guys, but the current inflation rates in March in America, Europe, and Japan were predicted to be this level before the war in Ukraine. That being the case, we must blame government spending and monetary policy for all of the current inflation.

But don’t worry, the full effect of energy prices will figure into inflation this summer and fall. The BOJ is still unlikely to hit its 2% goal as increases in commodity prices will drive down consumption.

America and Europe will certainly see inflation hit double digits as their governments will be spending money hand-over-fist to buy votes in upcoming elections and to pump up the stock markets with funny money to keep stock prices high.

prices were down 0.7 percent, reflecting what the bank says is the need for continued effort to achieve a sustainable cycle of dynamic economic growth that stimulates demand.

Printing bazillions of yen to buy all the Japanese government debt does not contribute to that, though.

The yen weakness is going to smash, not stimulate, demand as it’s making everything more expensive.

A better economy will come only from policy changes by the government. “3rd arrow” structural reforms etc, that never saw the light of day.

The massive change will only come as part of a epoch like the Meiji restoration or Japan’s defeat after World War Two.

The BOJ’s actions of aiding and abetting reckless government spending may be the trigger for the next big epoch…

One more thing:

This just in, the U.S. economy contracted an annualized 1.4% on quarter in the first three months of 2022, well below market forecasts of a 1.1% expansion and following a 6.9% growth in Q4 2021 mostly due to a record trade deficit and a decline in inventory investment. This time, exports dropped 5.9% (from 22.4% in Q4), while imports surged 17.7% (from 17.9% in Q4).

Source: U.S. Bureau of Economic Analysis

OK, just one more thing on topic.

Heating oil futures skyrocketed above the $4.7-per-barrel level for the first time (currently trading at 4.744 at writing). It is up 39.71% for the month, and 141.27% for the year.

Reminder: Heating oil, also known as No. 2 fuel oil, accounts for about 25% of the yield of a barrel of crude, the second largest "cut" after gasoline.

Now is the time to buy yen.

Ultra loose policy with inflation back for good.

These people are either crazy or deliberately criminal.

I remember days when the yen was around 400-500- $1, that's how old I am

For those keeping track of such things (in JPY Billion):

Money Supply M1 1006116.10, prev 998924.30

Money Supply M0 113766.80 , prev 113312.20

Money Supply M2 1183707.90, prev 1179160.10

Money Supply M3 1545156.70, prev 1541633.10

Central Bank Balance Sheet 735820.20, prev 730555.30

Loans to Private Sector 506326.00, prev 503822.90

Source: Bank Of Japan

We need inflation! We need inflation!

We need to stop inflation! We need to stop inflation!

Nobody believes in a 2 percent inflation rate. It 's more like 10 percent at least. Not to mention shrinkflation where everything is getting smaller.

During the best economic times in Japan the Yen was on average under ¥200 to the USD dollar.

The correlation of weak yen and the overall state of Japanese economy does not imply causation.

During those good old days, Japanese companies were on par or better in productivity than their foreign counterparts; Japan had a younger, growing population; Japan did not face heavy competition from SK, Taiwan, and China in automotive, consumer electronics, and heavy industries. Those days aren't coming back. Japan needs a new play book. And destroying the value of yen ain't it.

> Dave

Governments like to put everything on the Ukraine War

very very noble

don't worry about your problems

you need to think about Ukraine

To clarify.

In its meeting BoJ doubled down on the massive stimulus program, and its pledge to keep interest rates ultra-low, by offering to buy unlimited amounts of 10-year government bonds, to defend an implicit 0.25% yield cap around its zero target every market day.

BOJ also left its key short-term interest rate unchanged at -0.1%. Interest for 10-year bond yields are around 0%, by an 8-1 vote.

Inflation for the FY 2022 was revised upward to 1.9% from 1.1% but that for the FY 2023 and 2024 was projected to ease to 1.1%.

BoJ also disclosed a cut the FY 2022 GDP growth forecasts to 2.9% from 3.8% made in January, and slashed the FY 2021 GDP growth to 2.1% from 2.8%. For FY 2023, however, the outlook was revised higher to 1.9% from the previous 1.1%.

The yen is currently trading at 130.720, a 20-year low.

Biden-manufactured recession is on the way...

For those Japanese the falling yen means ordinary folks are more stretched,less disposable income, less leisure time.

For the foreigners in the lower paying industries it means that the yen in that pay at the end of the month buys less and anything repatriated is also a lot less.

The only real beneficiary ironically is the more well heeled tourist but they aren’t allowed in!

Well color me shocked

No they arent. They also cite the covid shutdowns 

Wasnt it governments that did the shutdowns too?

Expect the yen to fall further

But Japan is mostly running a trade surplus, so a weak yen is a plus.

the current inflation rates in March in America, Europe, and Japan were predicted to be this level before the war in Ukraine. 

yup, because the covid lockdowns were in full swing. Even today, one in five container ships are stuck in port while Shanghai port is closed. Ukraine is the latest disruption, whose effects will also be feeding through soon.

Governments like to put everything on the Ukraine War,

No they arent. They also cite the covid shutdowns and the solid recovery in US private demand, which isn't being met due to the global supply shock.

Old guys running stuff thinks the old tricks work. Japan needs an overhaul of their government but “the elders are always right” is embedding in their culture.

yen will be around 145 to a dollar by fall or sooner if they don’t stop giving handouts and keep their rates low.

Time to retire Kuroda....Abe,s pet should follow his master.

That 131 yen is really surprising. 140 then eventually back to the usual 115 by time tourists can come?

I'm going to repeat same thing over and over again, sell your yen until you still can.

Next level 145-150