There’s nothing new here, mainly a review of some of the week’s developments.
Ministers hint BOJ warming to 2% inflation target
Members of Prime Minister Shinzo Abe’s Cabinet hinted Friday that the Bank of Japan is moving closer to setting a 2 percent inflation target in a joint statement on policy coordination aimed at conquering deflation. The BOJ is scheduled to start a two-day Policy Board meeting Monday
BOJ Deposit Rate Cut Sign in Cash Operation Flops: Japan Credit
The failure of seven funding operations by the Bank of Japan is signaling expectations that policy makers will cut deposit rates. … “Considering the current outlook for rates, banks have no incentive to borrow,” Takafumi Yamawaki, Tokyo-based chief rates strategist at JPMorgan Chase & Co
Deflation so prolonged it’s now considered normal
A decade and a half after Japan slumped into deflation, the Bank of Japan is set to signal its strongest effort yet to reverse the trend. The biggest challenge may be that the nation has come to rely on falling prices… “The key is wages,” said Nobuyasu Atago, principal economist at the Japan Center for Economic Research and a former BOJ official in charge of price data. “Without pay increases, the economy won’t recover and households will only suffer from inflation.”
The powerful Keidanren business lobby signaled it won’t endorse pay raises during the regular wage negotiations with labor unions this spring. Prime Minister Shinzo Abe’s Liberal Democratic Party is considering tax breaks for companies that raise pay or expand hiring.
Monetary-easing steps fell short: Abe adviser Hamada hits DPJ deflation inaction
Koichi Hamada, one of Prime Minister Shinzo Abe’s special advisers, on Friday condemned past governments led by the Democratic Party of Japan for not pressing the Bank of Japan to conduct enough monetary easing steps to fight the country’s prolonged deflation.
‘Abenomics’ theorist wants further easing, yen’s depreciation
“Economic statistics show how the Bank of Japan alone (among central banks of developed countries) has been reluctant to expand credit, naturally resulting in the yen’s excessive appreciation,”
It should be “worried” only when the dollar/yen rate falls to 110 yen or below, a level prior to the 2008 collapse of Lehman Brothers, which triggered a worldwide economic crisis, Hamada said.
“But 100 or 95 is nothing to worry about,” he added.
Japan’s initial FY 2013 budget to total record-high 93 tril. yen
