BOJ to meet as weak consumer mood tests price targeting resolve

“Rapid yen declines have pushed up prices of food and other daily necessities. This came on top of falling real income from last year’s sales tax hike and so may have burdened households,” board member Yoshihisa Morimoto said.

Exactly what myself and other posters have been saying for months -- as recently as yesterday in fact.

That weak consumption is a bad omen for the BOJ, which hopes to spur expectations of rising prices so that households will spend more now rather than deferring consumption

But that iis exactly the problem with focusing on inflation. If higher food prices -- due to the lower yen -- are keeping consumers from spending more, they are not worried about what the cost of a TV or car may be in 12 months. They are worried about putting food on the table today. Abenomics is failing miserably.

It is hard to believe these guys at the Bank of Japan are really so stupid that they believe this nonsense they put out, but having seen Kuroda interviewed in English (his English was good, his answers incoherent) they probably are.

That weak consumption is a bad omen for the BOJ, which hopes to spur expectations of rising prices so that households will spend more now rather than deferring consumption

"Inflationary expectations" as a driver of spending is one of the most easily debunked fairy tales of economic theory and has been many times. It applies only to a very small percentage of spending / non-spending (affordability, necessity, and lack of money far more important) and even where it does apply it has no effect other than time shifting of the spending. Nobody puts off their purchase forever, and if they do save anything by waiting a bit they then spend that money on something else. If it were actually a true explanation of consumer behavior, nobody would have bought a computer in the last 30 years.

stimulus that aims to hit 2% inflation by printing money at an annual pace of 80 trillion yen

Once again, the myth that the BOJ is "printing money". They aren't, and there is no way possible they don't know that they aren't. All QQE does is force existing money out of government bonds and into other less safe investments, hopefully boosting asset prices and creating the magical "wealth effect", another piece of rubbish economic theory. They know all that that, although it goes over the head of 99% of the media.

Most Japanese work in small-medium size enterprises not connected to tourism, so the benefits to big companies or to those in tourism does not have much impact. That so many on this board still believe that myth of trickle down (more aptly trickle on) policies would be laughable if it didn't betray decades of brainwashing. If the government were really interested in raising wages, policies that would push companies to actually raise wages rather than hoard cash would help, along with raising the abysmally low minimum wage. Instead, we get these shows of Kuroda and Abe asking their buddies to raise wages while pursuing policies that go against this aim. Either they are stupid, too intoxicated on their BS, or simply cynically trying to be seen as doing something they have no real intention of carrying out.

'raising inflationary expectations '

We don't need any inflation, thanks.

Most Japanese work in small-medium size enterprises not connected to tourism, so the benefits to big companies or to those in tourism does not have much impact.

This is not true. The people who work in the tourist industries buy food, clothes, and other goods from the businesses which provide these. If I build a new hotel, I have to employ a great deal of workers to build the hotel, and to run it, I have to have the linen cleaned, and buy food for the restaurant. My staff may live in Chiba or Saitama, and they will spend the salaries which are provided by the tourists who stay at the hotel.

The best thing about tourism is that tourists spend much more money per day than the locals, and they don't consume any of the public services. They don't put their kids in the schools, they don't use the hospitals, and they won't collect national pensions. Fewer industries have a stronger economic effect than tourism.

What's more, tourists exchange their dollars, euros, or whatever, which allows Japan to hold a reserve of foreign currency, which it must use to pay for things priced in dollars or euros, and pretty much everything which is imported into to country.

All economics is trickle down, trickle up, or trickle to the side, it always has been so.

Export competitiveness has not risen by as much as Japan goverment had hoped. Higher costs have not been a problem for the biggest manufacturers that are able to pass on costs but have put a strain on those with less pricing power. This has partly been caused by the way in which companies have chosen to take the currency windfall, by improved overseas earnings rather than dropping prices to increase market share.

BOJ Governor Haruhiko Kuroda remains unfazed, stressing that a weak yen is positive for the economy

And this is what some with a clue have been saying for months.

Weak yen increases export, bringing in valuable overseas funds, increases manufacturing producing jobs and income, it also increases tourism which again brings in valuable over seas funds and also increases jobs, all these things put money back into this economy but then there are those who would rather have a strong yen so they can travel cheaply and spend the money off shore, which does nothing for the economy.