Bank of Japan keeps interest rates unchanged despite pressure over weak yen

Yen fell from 140 to currently 157 (11% in 4 months) while the economy is improving according to data?

The hard truth is that the government doesn’t want to raise interest on its own borrowing.

The government cannot really raise the interest rate much because it already costs 30% of its GDP just to service the debt it has accrued with near next to nothing interest rates and in addition any rise could cause a subprime fiasco since banks have given so many low income earners mortgages.

At some point making wages of the 90’s will return the economy to 80’s. Expect 200 yen to the dollar within the year. The standard middle class has started to shift to a more western amazing gap with a few having it all. In 10 years Japan, which I hope I am wrong, will be peasants and billionaires still using fax machines and postage stamps to send letters. Japan needs to cut taxes, cuts sales tax, cut import taxes, and stop shifting the wealth of the country to a few people.

The LDP has already decimated the middle class now it is doing its best to destroy the working class as well.

How could the BOJ do differently ?

Each step towards higher interest rate would kill many zombie companies, surviving only because they borrow for free or nearly free so they don't need to make any margin.

And with nearly soon 1 million less Japanese inhabitants per year, how can Japanese buying Japanese demand grow anymore ?

This scenario is the logical one except if the USA would intervene. Don't bet on that especially if Trump is coming back on stage.

Wait... hang on a second... the Bank of Japan just sitting by and doing nothing? That has certainly got to be something new!

Anyway, Japan will slip to world's fifth economy very soon, and out of the top ten likely by 2030. We're going back to third-world here, for sure.

Mum... keeping interest rate 0% is fine but just letting the Yen free-falling should not be a wise move.

The unabated spending by the LDP is finally coming home to roost.

Think a lot of Japanese are going to have a rude awakening in the coming months and years.

The Feds has cut banks off from their lifeline,by closing the BTFB ,they are able to see their worthless bonds to stay liquid

I am expecting the phrases:- Watching closely with high emergency, ready to take actions, etc., but it is so quiet this afternoon. Everyone is scratching his head.

US bank are paying 5 percent on deposits on average,why hold worthless yens

BOJ will be watching the ForEx even more closely now. They really like to watch ForEx.

72 year old Ueda

71 year ol Suzuki

LMAO

Pointless to criticeze these type of news.

I don't know nor the macro economics or the politics that you need to take a desicion. I haven't studied this, and I have to put some effort to understand it.

The desicion that is taken is bad or good.. depends on several factors including, I think, of time.

If I was good at this, I suppose I would be in those position where I can have some sort of influence this kind of decisions, but I am not so... why bother?

Now in the micro economics area.. i know i am with one foot in the abyss try to do my best but nothing is good enough.

Dying is becoming an option though....

Jiji Press cited sources Friday as saying BOJ policymakers would discuss ways to reduce the bank's purchases of Japanese government bonds.

Ways… just stop buying them. It’s easy. The reason they don’t do it is because the government’s finances will be disrupted big time, and they worry that will smash the economy.

But so too is this weakening currency.

keeping interest rate 0% is fine but just letting the Yen free-falling should not be a wise move.

Well, their monetary policies have a whole lot to do with the yen’s free fall.

It’s puzzling to me that the policymakers continue to act all clueless about what’s going on.

Unless they know even more than is clearly evident, and have elected to just do nothing and wait for an inevitable implosion?

That fellow who would often advise here “sell your yen until you still can” - good call!

They are waiting until after the G7 and G20 meetings.

The strong dollar is affecting other currencies, so I guess they are waiting for pressure from several countries on the US before making any decisions.

...or they are just a useless bunch of eejits.

tttccc111Today  05:41 pm JST

Mum... keeping interest rate 0% is fine but just letting the Yen free-falling should not be a wise move.

A country can decide it interest rate but can not do the same with its currency. Japan can strengthen the JPY in the short term by intervening selling some of it foreign exchange reserves but these reserves are limited and the foreign exchange market is huge.

US bank are paying 5 percent on deposits on average ,why hold worthless yens

Exactly, who would hold the pathetic poisonous yen? Everybody I know has for a long time, kept their funds in US Dollars, Swiss Francs and Gold. Everyday I see the joke of a "currency" the yen dropping rapidly to the year's end expected 200 to the Dollar. I just laugh, the j "authorities" have absolutely no idea what to do. Just laughable.

toilet paper yen. print the fake money ....

Japan can strengthen the JPY in the short term by intervening selling some of it foreign exchange reserves but these reserves are limited and the foreign exchange market is huge.

No they cant. Intervention is just burning money. The BOJ has no reasonable options left. Whatever they do will only make something worse. Their only hope is that something changes in the US.

umbrellaToday  07:59 pm JST

US bank are paying 5 percent on deposits on average ,why hold worthless yens

Exactly, who would hold the pathetic poisonous yen? Everybody I know has for a long time, kept their funds in US Dollars, Swiss Francs and Gold. Everyday I see the joke of a "currency" the yen dropping rapidly to the year's end expected 200 to the Dollar. I just laugh, the j "authorities" have absolutely no idea what to do. Just laughable

It all depends of you circumstances.

A young single (maybe you are one) is in a totally different situation than a parents of 3 kids all starting expensive private universities within 5 years. Also different from a young couple saving for a down payment for buying a real estate property in the near future. Also very different from a retired living mainly from his investments.

For these type of people it is perfectly rational to hold large JPY cash positions. The contrary would be careless as nothing is ever sure in financial markets

i think the BOJ has the misunderstanding. Free-falling yen will not be a good thing to the economy in any case. Who will actually spend earlier than later because of the yen is rapid falling?

I've said a few times, the BOJ won't do anything.

Companies have raised salaries, citing "stability of increasing" profit. "Increasing" because of what ? Definitely not from increasing productivity, this is Japan, LOL. Kishida will weaken the yen indefinitely to create the illusion of "increasing" profit year-on-year. No way to drop the yen back.

I'm starting to buy yen at 160 but not before.

I hope it keeps falling. It's the gift that keeps on giving for those of us who have most of our savings in foreign currencies (gold is also doing very well).

The BOJ is powerless. If they raise interest rates many companies now on the verge of bankruptcy will go over.

the Japanese state itself would need to spent even more on interest repayments and it can’t.

an intervention at this point would only give a temporary reprieve to the yen. Days or a week but the economy would even sink further on higher interest rates.

Japan’s only saving grace now is to become Asia’s and the world’s Disneyland. It has all the ingredients for it. Beautiful nature, food, drink, weather( winter and summer).

the yen will keep falling and so will Japan, indeed soon to the fifth economy and within 3 years out of the top 10.

There is no light at the end of the tunnel, the tunnel keeps getting longer. And darkness creeps up more and more.

Taiwanese companies are eating up Japanese companies at a record rate and Japan subsidizes them because they do not know what to do.

high end tourism is the only way out.

In Spain tourism is 12 % of GDP. But Japan has more trumps to play, but as usual, it does not know how.

@robert maes

Rip the band aide off and let all those zombie companies go belly up. It's called creative-destruction and is a key feature of capitalism, which did at one time, made Japan a wealthy country.

Japan’s only saving grace now is to become Asia’s and the world’s Disneyland. It has all the ingredients for it. Beautiful nature, food, drink, weather( winter and summer). 

Lord no. It's bad enough as it is. The tourists are here and doing diddly squat to increase the value of the Japanese Peso.

Japan’s only saving grace now is to become Asia’s and the world’s Disneyland. It has all the ingredients for it. Beautiful nature, food, drink, weather( winter and summer). 

I'm inclined to agree. The cheaper Japan gets for outside entities, the better.

Right now the government is propping up tons of unprofitable domestic companies that should have gone out of business decades ago. These corporations are essentially leaches on Japanese society, and there are a number of social problems they are largely responsible for, such as conformist work philosophy, unpaid overtime, rigid hiring seasons, insufficient holidays and poor work-life balance, ect. It's also harder for foreign companies to compete in Japan.

Couple these parasites finally getting what they deserve and a weak yen, that creates an opportunity for overseas companies to come here and improve things potentially.

Japan has the infrastructure. No one needs these corporate fossils anymore though. Let it end already.