business

BOJ, more confident about recovery, quietly eyes stimulus exit

24 Comments
By Leika Kihara

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24 Comments
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I think Aerosmith said it best: Dream On

1 ( +3 / -2 )

How does the headline reconcile with this statement from the body of the article???

With that in mind, the BOJ has no plans to trim the stimulus or publicly suggest the eventual drawdown any time soon, say those familiar with the internal debate.

I would say this statement is the more likely outcome.

2 ( +3 / -1 )

Well, how about naming and shaming all these black companies that have refused to pass on their tax cuts and dishing out a few fines to them? Yeah, companies are showing growth, but the majority of the public are still out of pocket!

-1 ( +3 / -4 )

signs that the economy has weathered last month’s sales tax increase

You can't just say that after less than 2 months, if people are hurting they are now digging into their saving therefore you wont know anything for at least 12 months.

0 ( +3 / -3 )

Boj assessment may be correct, Nikkei was up 34 points yesterday and today it closed at 34.43 (!) slow and steady progress (?)

-1 ( +2 / -3 )

Much of Japan's economic crisis is caused by crony capitalism.

3 ( +5 / -2 )

Words not found in this article...

GDP. Employment. Labor. Sounds like a pipe dream, guys.

2 ( +5 / -3 )

Why the worry? When the FED announced its tapering last year, the US economy and markets continued growing, despite all the misguided people who predicted doom and destruction.

In Japan, QE has run its course and lost potency. Now it's up to the banks and businesses to put all that liquidity to work.

-5 ( +3 / -8 )

despite all the misguided people who predicted doom and destruction.

Exactly and the misguided keep on predicting doom n gloom even when we keep getting daily news of the improving economy, news item after news item shows facts and figures, but I guess if you have your head in a bucket you'll never see things as they really are .

-4 ( +2 / -6 )

Well here's some actual "doom and gloom" that doesn't seem to be given too much national coverage...Japan's working poor just keeps increasing, now at n incredible 16%, the 6th worst among the 34 OECD countries.

http://www.reuters.com/article/2014/05/15/us-japan-economy-poverty-idUSBREA4D0U820140515

3 ( +5 / -2 )

Mission accomplished, famous last words. This article has so much fluff it could make a nice winter futon. The whole thing is a confidence building excercise for the masses. See everything is getting better, the news says so, Abe says so, right? We will stop stimulus someday but not just yet and we won't tell you cause we don't want to spoil the magic trick, someday, in the meantime please go shopping.

3 ( +4 / -1 )

@zootmoney

What does that have to do with the BOJ? "Working poor" is the result of the financial crisis caused by the US/multinational financial industry and by globalization, which is robbing workers in developed countries of their former prosperity.

-2 ( +1 / -3 )

Thank god, Japans GDP has maintained its spurious 3rd place in global terms. Shame that the actual people are suffering to prop up a failing group of leaders who are bent on taking wha they can. Getting as much money they can to support their offspring gaining office and fleecing what is left. At some distant point people might raise an objection to nepotism and hereditary titles...just not ready now. 2014 .

1 ( +2 / -1 )

“The BOJ may need to change its message to markets at some point later this year,” said a person familiar with the bank’s thinking. “The key is to avoid a spike in bond yields.”

That is correct. BOJ should prepare markets with clear intent in terms of exiting mechanisms of when and what ahead of planned pulling-out actions. In this way, the financial markets, especially the bond market won’t be spooked.

Besides of possibility of sudden spike of inflation, Other things that may need to pay attentions are the bond yield and uncollateralized overnight call rate. Any big swings during BOJ’s exit may frustrate investors and tax their patience.

On the top of all there BOJ talks, the long overdue structure reforms promised by Abe is still on his ever-growing promising list. Hopefully, he will make real creadible efforts on that front soon.

2 ( +2 / -0 )

@jefflee what does that have to with the BOJ? I would say it's doom and gloom that Abe (which of course includes his lackey the BOJ) and his policies have helped to exacerbate. A lot of the "working poor" problems stem back to the de-regulation of the employment market, which actually had its beginnings in the Recruit scandal of 1988.

2 ( +3 / -1 )

It seems to have been illegal to report real news in Japan since last December. The recent trend is for Japanese media to repeat the rubbish until people start believing it. Abe is a genius, the economy is great, all companies have given pay increases, Tokyo is the world's top tourist city and all problems in Fukushima have disappeared. Repeat to fade...

1 ( +5 / -4 )

Hampton, you can say that again. When the DPJ was in power, it felt like there was a mhcb broader mix of opinions being published about their policies, with seemingly more criticism than praise. With Abe, whose administration's policies seem to be overtly harmful to the middle class and the working poor, it's knee-jerk one-sided support all the time even as he explicitly vows to restroy the value of people's hard-earned savings.

2 ( +3 / -1 )

Current and former central bankers familiar with internal discussions say an informal debate is under way on how to prepare for an exit from the BOJ’s 13-month-old “quantitative and qualitative monetary easing.”

Translated means a conversation between mouthfuls over lunch, Abenomics has been mainlining for 13 months on BOJ's money printing, with this level of dependence expect some relapses in rehab.

3 ( +3 / -0 )

and signs that the economy has weathered last months sales tax increase

I must be one of those with my "head in the sand". My savings storm isnt being "weathered" at all.

3 ( +4 / -1 )

" taking first tentative steps toward a potentially momentous move for the world economy."

Have they been taking meaningless mumblings lessons from Greenspan and Helicopter Ben?

The Mr Magoos supoorting Abenomics' currency inflation to infinity short-sightedly believe that because the end hasn't happened yet, it won't happen. Go ahead and believe that along with PeterPan and Unicorns. The Titanic was also considered unsinkable.

1 ( +2 / -1 )

First of all, Kuroda and his team are keen to avoid market confusion and volatility that the U.S. Federal Reserve triggered in May 2013 when it first signaled the possible “tapering” of its extraordinary stimulus.

I suspect this is impossible. Few if any can read market sentiment accurately all of the time for one, and assuming the BOJ gets to the point where it believes it has succeeded, what are the chances that they with pull the stimulus at precisely the right time so as to prevent a relapse back to 0% inflation, and also prevent an inflation overshoot?

It seems like fantasy to think the BOJ can avoid market confusion and volatility. They will make mistakes, but then they will attempt to correct them. Those different types of scenarios are more what they should be thinking about, IMO.

In public, Kuroda has become more vocal about the need for government structural reforms, which shows he wants the BOJ to shift from boosting economic demand to playing a supporting role as Abe promises deregulation to boost Japan’s growth potential.

He's a good man, that Kuroda. To his credit he has been saying this from the outset, and Abe hasn't displayed the leadership so far to get anything much done. June is crunch-time.

0 ( +0 / -0 )

fxguy, why do you think June to be "crunch time?"

0 ( +0 / -0 )

Because Abe is due to produce details of his 3rd arrow in June. We've been around the block with this a few times already, and investors are going to need to see something they like if they are to be convinced that it's worth sticking around, IMO. He can't just keep talking forever. Yet another failure will hit Abe's popularity.

If he disappoints then I imagine Japanese stocks will get hit too, and perversely this could drive the yen up in the short term. That might help ease the trade deficit somewhat given energy imports will get cheaper (or at least speculators might read it this way).

Longer term though, such a failure won't bode well for Japan's future, and the trends of Japan's declining fundamentals are pretty clear as it is, so I don't expect yen-strength to be more than temporary.

But we'll see. It sounds like they will come up with some kind of corporate tax reduction announcement. The timelines will need to be reasonable. He's already failed on the TPP free trade chance, so he needs a big ticket measure of some description.

1 ( +1 / -0 )

fxguy, yeah, Abe has to pull a rabbit out of his ... hat.

0 ( +0 / -0 )

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