What's up with the Bank of Japan stance on interest rates?

It doesn’t make a lot of sense to raise rates when you’ve only got about 3% inflation that you believe is cost-push and thus temporary. The US and others risk falling into recession due to their tighter policy, a situation the BOJ wants to avoid. The US would still have some positive inflation in a recession, whereas Japan would sink back into the downward spiral of deflation, it is feared.

inflation is high for Japan at 3%, but you know its just going to drop below the 2% threshold when things return to normal next year, raising interest rates ,might seem like the thing to do short term, long term itll only damage the economy further, increasing home loans cost wont make people spend more itll just do the opposite, what needs to be done is force companies to match wage growth with at least the inflation rate if not more. More expendable income is whats needed, people wont spend what they dont have

what needs to be done is force companies to match wage growth with at least the inflation rate if not more

....which will never happen. Cheaper to just import loads of Vietnamese over who will work full-time for 120,000 per month before taxes.

All they have to do is hint at a pivot. They dont actually have to do anything, they could propose a move to 0% interest, and that would give people some confidence that the yen isn't becoming the next Lira.

jpy will go down to some 200jpy in near future,this is what exactly will happen.and that guy on photo knows that very well and can do nothing about it.

Chabbawanga is correct. Nothing will change tomorrow -If there is anything, it will be in the language later in the day.

@Eastman: Of course there so something he can do about it- he just won't. He could just hint at a change in YCC - Yen would gain 5 cents pretty quickly if he did - for starters.

By interest rate you mean THAT interest rate ? The money you give the bank when you take a loan from them ??

I wonder if Japan, you know the country with the largest debt on earth, had to start paying it ?

That it has failed is not factually correct,” Kuroda said. “I have no intention of resigning.”

Kuroda is being "factually" correct.

He has been successful in carrying out his mission of delivering monetary easing QE to Japan Inc. which is a basic income to the wealthy not available to the public except by a MMT reevaluation.

https://twitter.com/mcuban/status/1318929147348090882

@nero: Japan does have to pay interest on its debt. Go check JGB Yields.

Majority of Japanese mortgages are variable rate. Bump interest rates and quickly find a lot of people will be in trouble.

Lunacy. Someone must be spiking the water coolers at BoJ with some form of psychadelic drug.

Majority of Japanese mortgages are variable rate. Bump interest rates and quickly find a lot of people will be in trouble.

Screwed through inflation, or screwed by your mortgage. Worst thing is you dont even get to choose how you get screwed.

They can restore at least some temporary confidence in the yen by moving away from this ridiculous easing policy. We get it, Abe died, that doesnt mean you need to enshrine his awful economic policies in the constitution.

@Eastman

Today 03:38 pm JST

jpy will go down to some 200jpy in near future,this is what exactly will happen.and that guy on photo knows that very well and can do nothing about it.

Please enlighten us with more information regarding your visionary prediction, thanks.

Japan also is facing inflationary pressures, but on a much more modest scale.

I'm sorry but why are we downplaying this?

I go to my supermarket and every other day there are notices on a dozen of products that says price jump is scheduled following month.

Japan cares about business activity of corporations, thus doesnt hike interest rate. But how about the people?

As wtfjapan said, they need to increase wages as well, which will probably never happen. Food prices increasing, thus we are paying more consumption tax. But that tax money is getting invested into corporate loans, not back to the people.

Massive increases in food prices in Japan now.

It's not good at all for the working class.

Perhaps the Japanese government understands the raising of interest rates is is nothing more than a crapshoot a hit and miss, a total guess when government economists have no idea what to do.

Look at Canada, it has now raised the rates for a sixth (6th) time, and this was after research showed it wasn't affecting those they were aiming at but the lower income Canadians.

In April 18% of home owners were already at rates they could no longer afford, before yesterday's rate hike it had gone up to 25%.

So now places like Canada are going to see an even bigger problem with housing and especially low income as people sell their homes or banks foreclose.

That is on top of not being able to afford high energy costs higher food prices, etc...

So at least in Japan rents and mortgage payments are not jumping up like in other places where they keep raising rates.

Remember higher rates don't just affect the sections being targeted they always affect the fastest turnover consumables first.

So before it affects Apple iPhone it will affect fuel and food first and for many months if not years before.

I can skip a new smartphone I cannot skip food or my meds in either case I will die.

But higher interest rates will cause both my food and med prices to rise.

Find another way don't fall into the same trap the west has.

WHAT’S WILL THE BOJ DO NEXT?

What’s will they do? What’s, I wonder? What’s could they be thinking?

3% inflation is nothing and probably doesn’t need interest rates to go up. By the time the US, UK, EU have brought down their inflation, and Japan starts its nuclear power stations up, which will reduce dependence on gas and oil, reduce utility prices, also reduce co2, Japans inflation will probably drop again back to where is was. Another reason not to increase interest rates is, people won’t be able to buy a house and the gov may. Or be able to borrow the money they need as debt is already high.

personally I’m happy with the size deflation of some foods too. The price stays the same but the cookies are fewer. Great to loose weight and better for your health. There are so right teletybbies waiting in line at food banks in the uk saying they can’t feed themselves.

I think the official term for Kuroda's policy is the O-mikuji Strategy.

AP playing catch up

NYT had this exact same story a week ago

 Your hard-earned money in the bank won’t be earning much interest.

RIght, while banks themselves are earning money hand over foot from charging 3% and higher, up to 15% or more in some cases, from individuals who borrow from them.

This has been going on for a long time too!

nero

Today 03:51 pm JST

By interest rate you mean THAT interest rate ? The money you give the bank when you take a loan from them ??

> I wonder if Japan, you know the country with the largest debt on earth, had to start paying it ?

No idea why you think Japan doesn't pay it's debts, got some facts to back that up?

Now as for the often repeated "largest debt in the world" .

Look who owns that debt, the bank of Japan itself and the Japanese businesses and people, foreign entities hold less than 8% so no need for Japan to worry.

To compare Japan has $8.7 trillion debt 8% is just under $ 700 billion in foreign debt.

To put that in perspective.

The USA has $7.5 trillion in foreign debt with Japan holding the largest share at $1.23 trillion.

So Japan holds more USA Treasury bonds and debts than all the Japanese debt held by foreign entities.

@nero

“By interest rate you mean THAT interest rate ? The money you give the bank when you take a loan from them ??

No. Not THAT interest rate but the rate at which banks borrow money from the BOJ.

david Brent: “....which will never happen. Cheaper to just import loads of Vietnamese over who will work full-time for 120,000 per month before taxes.”

Sadly, many are now staying in Vietnam where, due to the current situation, they can make more money and have a higher quality of life in terms of wages and spending m.

I didn't know Yuri Kageyama had economics degree

In particular, this sub-title..

WHAT ARE OTHER CENTRAL BANKS DOING?

Meaning She meant CB of a sovereign nation should follow other big players..

Sadly, many are now staying in Vietnam where, due to the current situation, they can make more money and have a higher quality of life in terms of wages and spending m

Sorry. BoJ does not exist for Vietnamese or any foreign workers paid in Yen in Japan. Please leave, that's all can be said

BOJ has dug themselves into a bottomless pit.

Japan’s inflation is still a lot lower than in the U.S., where it’s been hovering at above 8%, and many other countries

—-

Japan doesn’t have as big portions as the US,

the roads are more narrow, yards in Japan?

Errr…

Yuri obviously likes comparing chalk and cheese

A question to Bank of Japan Governor Haruhiko Kuroda.

If I eat 1 apple out of 4 apples, how many will be left?

The answer probably will be?

I'm still calculating. Because you didn't eat it all.

The first thing the BOJ should do, is stop bankrolling the profligate government spending.

Printing more and more yen isn’t having positive impact.

Talk of raising short term interest rates, while the money printer continues to go brrrr, is cart before the horse.

People ought to remember this clown Kuroda is the same guy who said he was going to achieve 2% inflation in 2 years. He doesn’t have a clue what he is doing, and with inflation at 3% already, it takes a lot of faith in a big long term failure to continue to give him the benefit of the doubt.

The burden of proof ought be on inflation actually cooling down, not Mr Failure’s prediction of it coming down next year when he is scheduled to retire. So stop the money printing, and reassess when the actual data shows signs of heading in the right direction, not confusing to exceed the target.

3% is 50% above the target of 2%, and is price instability, not price stability.

This guy’s name is really Harikiri “Into the” Kurojanai da. He has an unenviable choice/position though. But does he get it? Risk hyperinflation or at least 50% of SMEs going bankrupt due to having to raise interest rates that in debt up to their eyeballs SMEs won’t be able to afford to payback yasui loans. Which is worse devaluing the Yen so much that Cult da Soridaijin cheap yen tourist policy looks good but in reality will takes more than 5 years. Or is this a stealth collab with the USA to get arms in cheaper as we know China’s is in invasion mode? Isekinicho ka? Fusankendayo

Look at the real hidden reason, if you look at the IMF and world markets that right there will tell you who the key players are. I think Japan is doing the right thing. The only reason why people in Japan are complaining about the rising cost of gas and food cost etc. Look no further the consumables that the people are consuming the most are things Japan is importing from other countries so the cost is passed off to the people this is why you see rising cost!

Japan has never mimicked the way other nations carry on. It has a power base in its senior citizens and will do anything and everything to keep those voters happy, and as such continue their endless power base. Just look at the pandemic and how Japan was the last country in the world to make it more inviting to visit, even though tourism brought in a lions share of gov't income. All part of their paying attention to who voted them in and how to keep this aged group happy. Nothing to do with economic sensibility.

BOJ spent $50 billion trying to prop up the yen vs USD and it didnt do anything. They should just buy gold with that and it would back stop the yen and have no affect on interest rates. No brainer.

The way Japan calculates its inflation rate is different from other countries. That’s the reason why it’s low compared to other countries. If it was calculated using the same factors then Japan inflation rate would be as high as the US or even higher! People still don’t realize that the Japanese Government and BOJ have a tendency to project false narratives as to show that everything is fine when in reality it’s not. Just look at the national debt which is at 235% which is worst than Greece which is at 181%. Time to remove all these old senile men from high positions and fill those with more qualified and knowledgeable people.

Tomdutchy

BOJ spent $50 billion trying to prop up the yen vs USD and it didnt do anything. 

WRONG!

Before Interventions:

Yen moved from Y133.43 to Y144.82 in a month.

Yen depreciated by Y11.39 or 10.8% during the period.

After the interventions:

Yen moved from Y144.82 to Y145.89 now (10/27 15:44UTC), in a month and half

Yen depreciated by Y1.07 or 0.7% during the period.

Obviously the interventions slowed Yen's slide.

The Japanese Loan Market will collapse if rates are increased significantly.

If you are a home owner, you will know that yourself.

For Corporations.... that's a magnitude of scale beyond comprehension of home owners....

Bill Mitchell, a professor of economics at the University of Newcastle in Australia, believes Japan's approach works well, even if it might look like “a crazy system" from the outside. Even after a property bubble burst in the early 1990s, the country kept unemployment relatively low. I think the Bank of Japan is doing exactly the right thing,” he said.

Have given up even trying to get my head around how Japan manages to do the opposite of everyone and still stay afloat and functional. As a new home owner am stoked to be here with the low interest rates. Owning a home is becoming mission impossible in many countries, my own Australia included. Mortgages become prisons. Not here.

Its obviously not all song and dance for the working poor, but if anyone wanted to ever make a go of it, do some research and make a startup company now is the time. The post corona playing field is wide ope with a plethora of untapped markets and chances. If people are waiting for some government to save them though, probably this is the wrong country.

J Life is remarkably stable in an incredibly unstable world. That’s all I know.