BOJ's rate hike ambiguity causing unwelcome angst

Japan and ambiguity, it really cost something.

They treat the economy like a game of pachinko....The house always wins.

I wonder if Gov Ueda ever sets foot in a food shop in Japan?

I guess he doesn’t…

it all boils down to Japanese employers' refusal to pay wages in line with their earnings growth. The premise, going back to Koizumi, was that if Japanese corporations earned higher profits, then some of the profit would be shared with their workers, which in turn would would trigger the wage-inflation cycle. So now, corporates are raking in their highest profits in history yet still refuse to pay higher real wages, and we are thus stuck in a low wage, low interest rate, low yen cycle. Thanks, guys.

Whatever the policy you can bet they have no interest in improving the lives of hard-working citizens.

Never talk straight always let them read between the lines so you can always excuse yourself and find an exit, I learned this living in Japan.

BOJ This is the worst source to go to when looking for an answer about the state of the economy, and this is why it survived for so long, they have NO ANSWERS.

After taking a holiday to Los Angeles, I can say Keep doing what you are doing Japan. Food and living costs in the USA are much higher than in Japan. I could not believe it.

The national debt service cost is approaching 23% of annual budget. Raising interest rates will exacerbate the situation. BOJ really, really doesn't want to do that. Yen will likely remain weak for the near term. Sorry households.

Fakenomics. No central bank has the power to control their national economy. Even the Fed would struggle. Some political regimes have more power (certainly Trump will), but they generally do financial damage rather than improve things.

The BoJ wants to intervene when it is reasonably certain that the markets are about to move in a way that would suggest their intervention worked. But given the general global economic chaos and the incoming Trump, nobody has much idea what might happen next. Making an intervention that makes no lasting difference would be embarrassing and give the game away.

The idea that interest rates are a magic joystick to control inflation or a national economy is also fakenomics. All a rate hike does is spread the pain of inflation to people with mortgages and loans, whilst ensuring the very rich get richer whilst they sleep. If you time it right, guessing correctly on what is happening globally, you can con the suffering middle classes that they are suffering for a reason. Even though they are not.

Real inflation - the cost of stuff at the checkout, raw materials, and energy - is eyewateringly higher than the joke 2% that keeps getting mentioned. Again, central banks can't do much about that, as it is caused by climate events (crop failures) and political stuff (sanctions, import taxes and caps). Politicians could directly influence some elements here (scrapping import taxes, removing caps and sanctions). But they don't really care about inflation hurting people, seeing these tools as part of their toybox for geopolitical games. They should, because people know how much things have gone up, and they will blame the regime in power (as the Tories and the LDP recently found out). It wasn't about scandals, 'it's the economy, stupid', to coin a phrase.

In normal times central banks can pretend to be in control of their national economy, even though that is impossible. Even Japan's bubble isn't that tough. But now, the best they can do is be vague and try not to get rumbled regarding their lack of muscle.

We all have targets and the like. Maybe we should incentivise economists - the Madame Zazas in suits. They only get their bonus when they guess right. When they guess wrong they get fired.

One of the reasons Japan’s official CPI is low is the large (almost one-fifth) slice which is taken up by rent inflation. That as we know is running at far less than 1% YoY.

As for jib - I imagine real wages in LA have risen more in line with the price increases you mention than here in Japan.

And editor - forgo in the sense of do without forgoes the ‘e’.after ‘r’.

it all boils down to Japanese employers' refusal to pay wages in line with their earnings growth. The premise, going back to Koizumi, was that if Japanese corporations earned higher profits, then some of the profit would be shared with their workers, which in turn would would trigger the wage-inflation cycle.

But what if that economic model was just wrong to begin with?

Blame the corporations’ independent economic decisions, or blame the people who believed that model and pursued it?

It’s time to try an economic model that actually has a track record, unlike the fanciful hopes behind Japan’s poor economic management.

BOJ playing with 'inflation' fire and their credibility by holding off on hikes. Future's never certain, but we know that inflation left unchecked tends to accelerate all else being equal.

All talk and very bad actions taken as usual.

Meanwhile, the Yen is approaching 160 again for the $, meaning that all that has been done so far to counter that was just vaporware and completely useless...