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Asian shares mostly higher ahead of key U.S. jobs report

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By ZIMO ZHONG

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Before meeting Thursday with Prime Minister Fumio Kishida, BOJ Gov. Kazuo Ueda told parliament the central bank would face an “even more challenging” situation at the year's end and in early 2024. On Friday, the U.S. dollar fell to 143.79 Japanese yen from 144.12 yen. It was trading above 150 yen until mid-November.

Updated data released on Friday showed Japan’s economy shrank by 2.9% year-on-year in the July-September quarter, worse than estimated earlier.

Well, we can clarify some of this a little bit more.

As reported today by Reuters, the Governor of BoJ testified before parliament on Thursday that an earlier exit from the negative interest rate policy was possible, depending on future economic and financial conditions.

So far, so good.

But, as it is often the case, reality sets in. The latest data DID show that Japan's economy contracted more sharply than was first estimated in 3Q 2023, by an annualized 2.9%, as consumers and businesses alike curbed spending. At the same time wages have yet to increase enough to offset the rising cost of living (inflation-adjusted real wages slumped 2.3% YoY, the 19th straight month of declines).

With wage growth comes more household purchasing power, which fuels demand for good of all kinds, right? And many believe that BoJ would keep ultra-loose policies until a positive wage-to-inflation cycle clearly kicks in. Something desired by BoJ, itself, as reflected in a statement by Wednesday by BoJ Deputy Governor Ryozo Himino, who said that an exit from ultra-loose policy, if done properly, would reap benefits for the economy, thus signaling an end to decades-long super-low interest rates.

BoJ is expected to chew on fresh quarterly growth and price projections at it’s meeting on January 22nd. Let's see what happens.

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@Skeptical:

The outcome of the spring labor negotiations in April will be the key consideration.

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an earlier exit from the negative interest rate policy was possible, depending on

This negative interest policy is just a gimmick in my eyes.

I don’t know of anyone or thing actually paying a negative interest rate, that’s how limited in scope it is. The only impact of canning it would be as a signal that they want to ease off on their easing. They haven’t even done that much yet :(

many believe that BoJ would keep ultra-loose policies until a positive wage-to-inflation cycle clearly kicks in. 

Originally they said they wanted inflation.

Now that we have inflation, they say that they want more - a lovely wage increase dynamic to go with the inflation.

But when did crazy easy monetary policy and inflation ever achieve that, and by what economic theory would it?

There is a wealth of history of authorities debasing their currencies, and I’m not aware of which of those times led to a great economy with rising real wages. The opposite rather seems to be the typical outcome.

Japan’s politicians are clueless about economics and keep selecting BOJ board members who will finance their deficit spending.

Japan’s populace doesn’t even want inflation. They preferred it when we had price stability.

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