Latest news with #KazuoUeda
Reuters
7 hours ago
- Business
- Reuters
BOJ to keep raising rates if economy improves, Governor Ueda says
TOKYO, June 20 (Reuters) - Bank of Japan Governor Kazuo Ueda said on Friday the central bank will continue to raise interest rates if improvements in the economy keep the country on track to durably achieve its 2% inflation target. "Underlying inflation may stagnate due to a slowdown in economic growth, but likely to accelerate thereafter as intensifying labour shortages heighten medium- to long-term inflation expectations," Ueda said in a speech.
CNA
7 hours ago
- Business
- CNA
BOJ to keep raising rates if economy improves, Governor Ueda says
TOKYO :Bank of Japan Governor Kazuo Ueda said on Friday the central bank will continue to raise interest rates if improvements in the economy keep the country on track to durably achieve its 2 per cent inflation target. "Underlying inflation may stagnate due to a slowdown in economic growth, but likely to accelerate thereafter as intensifying labour shortages heighten medium- to long-term inflation expectations," Ueda said in a speech.
The Star
11 hours ago
- Business
- The Star
Caution by BoJ likely to keep Japanese capital overseas
Japan still has plenty of financial muscle with a net US$3.5 trillion in overseas stocks and bonds. — Reuters The Bank of Japan (BoJ) is taking a more cautious approach to reducing its balance sheet, meaning Japanese capital invested overseas is less likely to be coming home anytime soon. In the face of heightened economic uncertainty and recent volatility at the long end of the Japanese Government Bond (JGB) curve, the BoJ announced on Tuesday that it will halve the rate of its balance sheet rundown in fiscal year 2026 to 200 billion yen or about US$1.4bil a quarter. The central bank began gradually shrinking its bloated balance sheet 18 months ago and last August began an even more gradual interest rate-raising cycle, representing a historic shift after years of maintaining ultra-low and even negative nominal rates. All else being equal, this modest tightening would be expected to narrow the yield gap between Japanese and foreign bonds, making JGBs more attractive to domestic and foreign investors while also strengthening the yen. So why hasn't the Japanese capital been coming home? In part, because Japan's real interest rates and bond yields remain deeply negative, and the latest BoJ move suggests this is likely to remain the case for the foreseeable future. The prospect of Japanese real returns staying deeply negative is enhanced by current inflation dynamics. Price pressures Inflation in Japan is the highest in two years by some measures and may prove sticky if Middle East tensions continue to put upward pressure on oil prices. Japan imports around 90% of its energy and almost all of its oil. Japan's yield curve could also potentially flatten from its recent historically steep levels if the BoJ's decision caps or lowers long-end yields. And the curve will flatten further if the BoJ continues to 'normalise' interest rates – something BoJ governor Kazuo Ueda insists is still on the table, although markets think the central bank is on hold until next year. Either way, a flatter yield curve won't be particularly appealing to Japanese investors who may be considering pulling money out of the United States or European markets. And there is a lot of money to repatriate, meaning even marginal shifts in Japanese investors' positioning could be meaningful. Assets abroad While Japan is no longer the world's largest creditor nation, having recently lost the crown to Germany after holding it for more than three decades, it still has plenty of financial muscle with a net US$3.5 trillion in overseas stocks and bonds, the highest total ever. Analysts at Deutsche Bank estimate that Japanese life insurers and pension funds hold more than US$2 trillion in foreign assets, around 30% of their total assets. What would prompt Japanese investors to repatriate? In a deep dive on the topic last month, JP Morgan analysts said several stars would have to align, namely a sustainable rise in long-term Japanese interest rates, an improvement in the country's public finances, and steady yen appreciation against the US dollar. That's a tall order. But if this were to materialise, and banks and other depository institutions reverted to pre-'Abenomics' asset allocation ratios of 82% domestic bonds and 13% foreign securities, repatriation flows from these institutions alone could amount to as much as 70 trillion yen. That's just under US$500bil at current exchange rates. That's not JP Morgan's base case though, certainly not in the near term. But over the long term, they think some reversal of the flow of capital from JGBs into US bonds over the last decade or more is 'plausible'. The BoJ's decision on Tuesday probably makes the prospect of any significant capital shift less plausible, though, at least for now. — Reuters Jamie McGeever is a columnist for Reuters. The views expressed here are the writer's own.
CNBC
14 hours ago
- Business
- CNBC
Japan's core inflation hits highest level since January 2023, putting pressure on BOJ to raise rates
Japan's core inflation rate climbed to 3.7% in May, marking its highest level since January 2023 and putting more pressure on the Bank of Japan to raise rates to combat inflation. The figure — which strips out costs for fresh food — was higher than the 3.6% expected by economists polled by Reuters, and is above April's reading of 3.5%. Headline inflation came in at 3.5%, lower compared to the 3.6% in April. This marks the 38th straight month that inflation has run above the BOJ's 2% target. The so-called "core-core" inflation rate, which strips out prices of both fresh food and energy and is closely monitored by the BOJ, climbed to 3.3% from 3% in the month before. The inflation figure comes as the central bank held rates at 0.5% after its monetary policy meeting earlier this week, although it said in its statement that moves to pass on wage increases to selling prices have continued, propping up core inflation. BOJ Governor Kazuo Ueda reportedly told Japan's parliament last week that the central bank will continue to raise rates "once we have more conviction that underlying inflation will approach 2% or hover around that level." However, the bank is forecasting that inflation will be expected to wane moving forward, adding that "underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy." Separately, Japan's GDP also shrank 0.2% in the quarter ended March compared to the preceding period as exports declined, marking the first time in a year that the economy contracted on a quarter-on-quarter basis.
The Mainichi
2 days ago
- Business
- The Mainichi
Tokyo stocks rise for 3rd straight day on weaker yen, Nintendo
TOKYO (Kyodo) -- Tokyo stocks climbed Wednesday for a third consecutive trading day, with the Nikkei index ending at a new four-month high, helped by a weaker yen against the U.S. dollar amid fears of the Israel-Iran conflict escalating and rises in game-related issues including Nintendo. The 225-issue Nikkei Stock Average ended up 348.41 points, or 0.90 percent, from Tuesday at 38,885.15, its highest since Feb.19. The broader Topix index finished 21.40 points, or 0.77 percent, higher at 2,808.35. On the top-tier Prime Market, gainers were led by pulp and paper, securities house and precision instrument issues. The dollar, often sought in times of crisis, remained firm mostly in the lower 145 yen range in Tokyo, as hopes for a cease-fire in the Middle East receded after news reports that U.S. President Donald Trump is considering attacking Iranian nuclear sites. The yen was also sold after Bank of Japan chief Kazuo Ueda expressed Tuesday a cautious stance on further raising interest rates, citing uncertainty about economic prospects caused by steep U.S. tariffs, dealers said. Stocks initially declined, tracking falls overnight on Wall Street amid caution over Middle East tensions. But they soon erased their losses and rose as a weaker yen helped lift export-oriented auto shares. The market later gained upward momentum, as game-related stocks were notably sought on growing expectations for an improved business performance after Nintendo Co. said it had sold over 3.5 million units of its Switch 2 console worldwide in four days following its launch this month. "The strong sales are extremely positive for the market," said Makoto Sengoku, senior equity market analyst at Tokai Tokyo Intelligence Laboratory Co. "The (game) content industry has been setting the theme of the market, and although Trump's tariffs may have some impact on the industry, it has dedicated fans" supporting it, Sengoku added. Nintendo rose for the fifth straight trading day, ending up 6.59 percent at 13,260 yen.
