Japan’s first step to new normal is the easiest 19 Mar 2024 The central bank raised interest rates, ending 26 years of unconventional stimulus. Policymakers hinted they will keep borrowing costs steady for a while but the pressure to curb inflation, rather than unleash its virtues, may rise fast. The hard work for the country starts now.
Japan’s rate shift will hit zombie firms hardest 14 Mar 2024 The central bank could end an era of negative borrowing costs as early as next week. In this Viewsroom podcast, Breakingviews columnists argue that large companies are ready for the tightening, but many struggling small businesses could hit the wall even if policymakers go slow.
Why central banks risk making more mistakes 27 Feb 2024 Western rate-setters were late in fighting inflation. In this Exchange podcast, TS Lombard economists Dario Perkins and Davide Oneglia argue that, as price growth abates, the US Federal Reserve and European Central Bank may be too slow in easing monetary policy.
Japan’s rates tweak is careful and crafty 2 Nov 2023 The central bank changed its policy to allow higher 10-year bond yields. Unlike the US, it can afford to raise borrowing costs slowly as inflation is low. In this Viewsroom podcast, Breakingviews columnists explain why monetary tightening as others loosen may give Tokyo an edge.
BOJ chooses slow path out of zero-rate limbo 31 Oct 2023 Japan’s central bank again tweaked its policy to permit slightly higher yields on 10-year government bonds as it inches back to positive interest rates. The snail’s pace is understandable. Yet with bond yields rising across the developed world, it remains a loose-money outlier.
Capital Calls: Bank of Japan, StanChart 28 Jul 2023 Concise views on global finance: Governor Kazuo Ueda shook markets by introducing a more flexible approach to controlling government bond yields, but he can easily retreat if inflation drops. Meanwhile, Bill Winters’ lender is improving but the heavy lifting is far from over.
Capital Calls: Exxon, US regional banks 28 Apr 2023 Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.
Bad news salvo gives Bank of Japan some cover 16 Mar 2023 The collapse of U.S. lender Silicon Valley Bank knocked down sovereign bond yields. Consumption remains soft, and while Japan Inc is hiking wages by 3% on average, that’s well below inflation. There’s nothing to cheer, but it takes pressure off the BOJ to adjust rates.
Japan’s next central bank chief may rue promotion 13 Feb 2023 Bank of Japan Governor Haruhiko Kuroda retires in April. His successor’s first task will be to tweak monetary policy without wrecking the $5 trln economy, upending markets or crippling the BOJ’s balance sheet. And that’s just the start of a long to-do list.
Bank of Japan has learnt danger of half-measures 18 Jan 2023 The central bank’s decision to stay put on interest rates saw the yen soften and hurt 10-year bond yields. Last month’s surprise tweak to bond trading bands failed to impress traders. Inaction may be painful and expensive, but muddled economic signals make it understandable.
Tokyo blinks in game of forex chicken 22 Sep 2022 Japan has responded to the Federal Reserve’s rate hikes by moving to prop up the staggering yen, the first intervention since 1998. The country’s economy and Bank of Japan Governor Haruhiko Kuroda’s loose policy make it unlikely the plan will work. The attempt may even backfire.
Bank of Japan needs to pick yen battles carefully 15 Sep 2022 The central bank is signaling it may soon intervene as its currency hits 24-year lows. Slowing rather than reversing the U.S. dollar’s rates-driven strength may be achievable, but even that demands a cannier deployment of weaponry than just throwing money at the problem.
Central bankers have more cards up their sleeves 29 Apr 2020 Fed Chair Jay Powell and his peers have fashioned new tools to fight the Covid-19 crisis. In future downturns, they could copy the BOJ’s stock buying and, in extremis, consider financing governments directly. Only surging inflation or overt political meddling will hold them back.
Bank of Japan tests the limits of monetary policy 1 Oct 2019 The weakest Japanese government-bond auction in three years caused global yields to jump. The swift reaction, rooted in uncertainty about new policies designed to keep rates low, should teach Europe a worrying lesson: A bond-purchasing safety net can sometimes be dangerous.
Central banks’ gold fever is anything but reckless 5 Feb 2019 Their 2018 purchases of the yellow metal were the second-highest on record and up nearly three-quarters from a year ago. But this isn’t a speculative punt on prices rising. Instead, it’s a logical precaution against rival currencies and U.S. self-harm eroding dollar dominance.
Sorry is the hardest word for central bankers 16 Nov 2017 Bank of England Chief Economist Andy Haldane says rate-setters should speak simply and honestly to the public. The first is easier than the second. Admitting past mistakes or doubts about the present is tough for institutions whose clout depends on an aura of omnipotence.
Central bankers go self-referential on rhetoric 14 Nov 2017 Fed Chair Janet Yellen and other top rate-setters took the stage in Frankfurt to discuss how they communicate. It’s a slightly meta admission of the role speechifying has come to play in monetary policy in an era of ultra-low interest rates. But wordiness brings its own perils.
What Carney can learn from Yellen 21 Sep 2017 Fed Chair Janet Yellen showed rate-setters can shock markets even when they stick to the script. That’s a lesson for the Bank of England’s Mark Carney, who has talked up a rate rise this year. Like her, he may have to hike without having solved a host of economic puzzles.
Bank of Japan can hold out as Western yields rise 7 Jul 2017 The central bank underlined its determination to keep 10-year yields close to zero by offering to buy unlimited bonds. The BOJ has the tools, market dominance and motivation to hold firm. Tighter policy in the West should help Japan by weakening the yen and importing inflation.
Bank of Japan gets serious on yield-curve control 18 Nov 2016 The Bank of Japan has put its new framework into practice for the first time, offering to buy unlimited amounts of short-term bonds to shield Japan from rising global yields. The BOJ may end up buying huge amounts to counter a selloff, or underwrite a government spending spree.