Bank of Japan (BOJ) Governor Kazuo Ueda kept rate hikes in play this year by turning a potentially messy parliamentary hearing into a relatively straightforward reiteration of policy in his first public remarks following a global stock market rout.
“If we are able to confirm a rising certainty that the economy and prices would stay in line with forecasts, there is no change to our stance that we would continue to adjust the degree of easing,” Ueda said in response to questions from lawmakers yesterday.
When asked about the market ructions that occurred earlier this month, Ueda played down the significance of the BOJ’s rate hike last month, citing concerns over the state of the US economy as the key catalyst, adding that the “overdone” worries have since eased.
Photo: Bloomberg
At the same time, he signaled that he does not plan to rush ahead with the next rate hike, saying the BOJ needs to carefully watch the impact of unstable financial markets on the inflation outlook.
The governor’s remarks suggest that the sharp market tumbles early this month would not deter authorities from considering more interest rate increases as the central bank unwinds years of ultra-easy policy, even if the next move is not imminent.
Ueda is sticking to his view that the central bank would hike rates if the economy meets expectations, rather than needing economic data to exceed forecasts to trigger policy moves, said David Forrester, a senior strategist at Credit Agricole CIB in Singapore.
“The fact that Ueda is sticking to this rhetoric despite recent financial market turbulence is positive for the yen,” Forrester said. “He showed no regret about the rate hikes to date and signaled the central bank will raise rates further if data continue to track its projections. The takeaway — recent volatility in stocks and the yen hasn’t derailed the plans to normalize policy.”
While the BOJ is widely expected to stand pat on policy when the board meets next month partly to avoid any market ripples when Japan’s ruling party chooses a new leader, many surveyed economists expect the bank to increase borrowing costs again by December.
Ueda’s comments on watching markets for now echoed remarks delivered by his deputy, Shinichi Uchida, earlier this month when the central bank was looking to reassure jittery investors. Still, the governor stopped short of repeating Uchida’s pledge not to raise rates when markets are unstable.
Instead he pledged to carefully communicate the bank’s thinking to ensure market participants are not taken by surprise.
“We will watch financial markets with an extremely high sense of urgency for the time being,” he said.
“For those market participants looking for some comments as dovish as Uchida’s, his remarks were a little negative, but the impact was limited,” Pictet Asset Management Japan Ltd strategist Jumpei Tanaka said.
The BOJ has been criticized by those who said the July 31 hike and Ueda’s post-decision pledge to continue raising rates if conditions allow were key factors that triggered a massive sell-off on global financial markets days later.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS