Kuroda says BOJ can smoothly withdraw stimulus

By Leika Kihara

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Food prices are also high because of the government's preference to favour vested interests over the general populace.

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Kuroda is delusional. The Engels coefficient (the proportion of income spent on food) has reached a 29 year high in Japan. This is a result of the BOJ trying to reduce the value of the Yen, which has raised the cost of imported food. Money spent on food is money that cannot be spent on other consumer goods and this is why the economy isn't doing well.

If Kuroda wants to stop buying government bonds he should expect interest rates to increase steeply. Nobody else would be daft enough to buy them at 0% yield, as Kuroda does. The only smooth exit Kuroda can expect is to leave the BOJ before everything comes crashing down.

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Strange shocking very volatile things happened in financial markets that are "controlled and managed" after a long time. The Yen as "controlled" by BOJ is in this class.

On Yen, before it depreciates to 500 Yen to a Dollar to reflect a relatively weaker and weaker Japan, will it appreciates to 75 Yen to a Dollar boosted by its current account surpluses first? A long-term double bottom at 75 (last seen at 2011) before it really fall out of bed? It will be violent and fierce. Probably Kuroda will not be around then.

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That's not going to happen for while.

So what. Good luck if you think nothing changes until the BOJ exit strategy is actually implemented. The markets will have moved long before that is the case, but when exactly those moves start, no one knows. No one can know. But the writing is on the wall for those who care to sinply read. Getting insured for this is the only rational action to take, not take no action until one is already flying off the cliff.

And if it did, the "hikes" would be minuscule.

Were that the case, then enjoy the inflationary spiral.

People have been telling me that for about 10 years now, and none of their predictions have come close to coming true. 

They are what is known as 'being early'. What the are wrong on is thinking Japan is the only country where things are going on in the world, and thinking they know the when.

Personally I have some British pounds, and intend to buy more soon. The volatility around Brexit was nothing compared to what may happen to the yen.

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... when the appropriate time to do so came.

Right about the twelfth of never.

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"The BOJ hiking rates implies taking losses..."

That's not going to happen for while. And if it did, the "hikes" would be minuscule.

"Yen down, inflation up... ugh" 

Oh, the horror! People have been telling me that for about 10 years now, and none of their predictions have come close to coming true. A couple are Brits, who converted the bulk of their yen holdings to pounds, because, of course, the BOJ's "aggressive money printing" was set to turn the yen into "funny money," they said smugly. The delicious part: this was before the Brexit vote. LOL.

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Hmmmmm.....  and yet they have been "stimulating" the economy for years and anytime there is a hint of tightening currencies and securities markets go nuts.....

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How much of what he says does he also believe. As the chief he can't say what he really thinks, but what he must to keep the music playing.

While the US Fed holds debt that pays a relatively high rate of interest, and can therefore afford to hike the rates which it pays on excess reserves to tighten, the BOJ holds debt that pays almost zero rates of interest. The BOJ hiking rates implies taking losses, and this is the central bank behind the value of the yen. It may not be fun at all for yen holders when the time comes. Yen down, inflation up... ugh

This is one of the reasons people have doubts about the BOJs ability to tighten.

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