Latest news with #HaruhikoKuroda
Japan Times
07-05-2025
- Business
- Japan Times
Ex-BOJ Gov. Kuroda urges calm response to Trump tariffs
The Japanese government should respond calmly to U.S. President Donald Trump's tariff measures, former Bank of Japan Gov. Haruhiko Kuroda said in a recent interview. "It's better not to be worked up by every little thing, but to sit down and respond," Kuroda said, referring to frequent changes in U.S. tariff policy. Kuroda criticized Trump's tariffs as "not even in the interest of the United States," arguing that they will accelerate inflation and dampen consumption. The Trump administration has imposed additional tariffs on steel, aluminum and automotive products, as well as a base reciprocal tariff of 10%. Stay updated on the trade wars. Quality journalism is more crucial than ever. Help us get the story right. For a limited time, we're offering a discounted subscription plan. Unlimited access US$30 US$18 /mo FOREVER subscribe NOW Meanwhile, it has suspended country-specific additional reciprocal tariffs in the face of financial market turmoil. "What Trump will do is unpredictable, so U.S. companies are holding back on capital spending, which may lower U.S. growth in the medium to long term," Kuroda said. "U.S. inflation could rise again to 4% to 5% in early autumn, boosting consumer frustration," he added. In its latest global economic outlook report, released last month, the International Monetary Fund revised down Japan's economic growth projection for 2025 by 0.5 percentage point from its previous January forecast to 0.6%. "Slower growth in the U.S., the largest export destination (for Japan), would have a negative impact on Japan," the former BOJ chief said. However, he added that the U.S. tariff policy will not necessarily deal a heavy blow to Japan. A tit-for-tat tariff war between the U.S. and China could create demand for Japanese products as alternative goods, he noted. Kuroda downplayed the possibility of a so-called second Plaza Accord, amid speculation in financial markets of such a deal to weaken the dollar to correct trade imbalances. In the 1985 Plaza Accord, Japan, the U.S., Britain, France and then-West Germany jointly intervened in currency markets to guide the greenback lower. After U.S. stocks, bonds and the dollar have been sold off at the same time due to investor distrust of the Trump administration's policies, Kuroda said, "There is no discussion of weakening the dollar at this point." Kuroda noted that while such a discussion is possible in the future, it is unlikely that 20 eurozone economies would unite and join. Kuroda acknowledged the BOJ's policy normalization efforts under his successor, Kazuo Ueda, as "appropriate." "The norm that wages and prices won't rise (in Japan) has been broken, and we are close to seeing long-term inflation expectations settle around 2%," a condition for declaring a full exit from deflation, he said. Ueda led the BOJ to end its negative interest rate policy in March 2024 and to raise its policy rate last July and this January. But due to growing uncertainty caused by U.S. tariffs, Kuroda said that the BOJ "may not be able to continue rate hikes at the pace of once every half year."
Reuters
31-03-2025
- Business
- Reuters
BOJ to cut buying of super-long bonds for first time in taper plan
TOKYO, March 31 (Reuters) - The Bank of Japan said on Monday it will reduce purchases of super-long bonds for the first time since embarking on a quantitative tightening (QT) plan last year, taking another key step towards diminishing its huge presence in the bond market. The cut to longer-dated bond buying underscores the central bank's commitment to phase out the stimulus programme that former Governor Haruhiko Kuroda began in 2013 to break Japan out of deflation and economic stagnation. Under its bond-buying plan for April-June, the BOJ said it will slash its monthly Japanese government bond (JGB) buying by another 395 billion yen ($2.65 billion) from April. That brings the monthly total of the bank's purchases down to about 4.105 trillion yen. The BOJ will buy a total of 405 billion yen of bonds with 10-25 years left to maturity per month in the second quarter, down from 450 billion yen previously. It kept the level for bonds with more than 25 years to maturity unchanged. Shoki Omori, chief desk strategist at Mizuho Securities, described the move as "a cautious adjustment in the long end by the BOJ (that) implies that the BOJ is concerned about the long-end market conditions, where we are lacking pure buyers such as lifers." "Despite the technical adjustment by the BOJ in the operations, it does not guarantee decent support in the long end of the curve." The central bank also trimmed buying of debt with less than a year to maturity for the first time, to 100 billion yen monthly from 150 billion yen. Monthly purchases for other maturity baskets were each reduced by 100 billion yen per month. Under a QT programme laid out in July, the BOJ has been slowing bond purchases by around 400 billion yen per quarter to halve monthly purchases to 3 trillion yen by March 2026. But it had refrained from reducing purchases of super-long bonds as it focused on tapering other maturities, particularly the benchmark 10-year notes it amassed during a massive stimulus programme that ended in March last year. The decision comes ahead of the BOJ's scheduled review of its existing QT programme in June, when it will also announce a bond taper plan for April 2026 onwards. The BOJ last year pulled short-term rates out of negative territory and ended a policy capping bond yields around zero, on the view Japan was on the cusp of durably hitting its 2% inflation target. It raised its short-term policy rate to 0.5% in January and signalled readiness to keep hiking rates if economic and price developments move in line with its forecasts. Aside from raising short-term rates, the BOJ is seeking to gradually reduce the size of its huge balance sheet. It owns around half of the outstanding JGBs in the market with its bond holdings now about 600 trillion yen - roughly the size of Japan's gross domestic product (GDP). ($1 = 149.1900 yen)
Yahoo
22-03-2025
- Business
- Yahoo
Hotter-Than-Expected Core Inflation in Japan Sparks Rate Hike Talk, Threatens Crypto
Just when it appeared that the yen scare could be easing, Japan has reported an uptick in core inflation. Data released early Friday showed Japan's core inflation, which stripes out prices for fresh food, rose 3% year-on-year in February, moderating from January's 3.2% but beating the consensus forecast for 2.9%. The headline consumer price index eased to 3.7% from 4%. Overall, both indices remained well above the Bank of Japan's 2% inflation target, validating the central bank chief Haruhiko Kuroda's declaration of victory over decades of deflation. Notably, since November, Japan's headline inflation has been running hotter than that of the U.S.—almost 100 basis points (bps) higher now. The sticky inflation, plus wage hikes from the shunto wage negotiations, have bolstered calls for BOJ rate hikes. In other words, a potential yen rally, known to destabilize risk assets, including cryptocurrencies, is back on the table. As of writing, the dollar-yen (USD/JPY) pair traded at 149.22, having bounced nearly 300 pips in a sign of renewed yen weakness since March 11, according to data source TradingView. That said, the narrowing or declining U.S.-Japan 10-year bond yield spread supports yen strength. Japanese yields have been rising across the curve, offering bullish cues to the yen. As of writing, Japan's 10-year bond yield held above 1.5%, and the 30-year yield was above 2.5%, both at multi-decade highs. A renewed yen strength could translate into risk aversion, the likes of which we saw in August last year. Sign in to access your portfolio
Japan Times
13-02-2025
- Business
- Japan Times
It's time for Japan to admit victory over deflation
Old central bankers never die. And often, they don't fade away either. Haruhiko Kuroda, the Bank of Japan boss for a decade until 2023, was one such figure who last week declared that Japan "has completely exited deflation.' Having presided over a decade of massive stimulus, his comment is of course self-serving. But with core consumer price rises in January expected to hit 3%, they seem accurate. So why the controversy? The problem is that the Japanese government, and Prime Minister Shigeru Ishiba in particular, feel differently. When asked for his take on whether Japan suffers from inflation and not its pernicious opposite, Ishiba demurred.
Zawya
07-02-2025
- Business
- Zawya
BOJ's fresh take on labour crunch opens door for more rate hikes
TOKYO - The Bank of Japan is increasingly blaming chronic labour shortages, not stagnant demand, as the main reason for its weak economic activity, a justification it may use to lift interest rates beyond what was initially expected. From factories to hotels to restaurants, Japanese businesses are struggling to hit full capacity not because they can't find customers but because they can't find workers, goes the commentary now emerging more from the central bank. While the tight labour market is not a new trend, the BOJ's more vocal concerns about the resulting wage and inflationary pressures mean it will be more inclined to look past economic weakness as it considers raising interest rates further, analysts and policymakers say. "My view is that ... the output gap is already in positive territory in reality and the lack of supply capacity is exerting upward pressure on prices," Naoki Tamura, a hawkish BOJ board member, said on Thursday. On paper, Japan's output gap, which measures whether the economy is running at its full potential, remains slightly negative, suggesting demand lacks momentum to ignite inflation. Coupled with soft consumption, it has been seen by analysts as a factor that could discourage the central bank from raising borrowing costs too much. But BOJ policymakers are challenging that narrative. A close look at the BOJ's quarterly outlook report published in January shows the bank turning more attention to growing signs wage-driven inflation is taking hold due to chronic labour shortages, in turn building the case for sustained, steady rate hikes. In that report, the BOJ said a dwindling pool of female and elderly workers meant labour market conditions are tightening even amid subdued economic growth. "In this situation, upward pressure on wages and prices is likely to be stronger than suggested by the output gap, given that firms in many industries have started to face labour supply constraints," the report said. The report also analysed how labour-intensive sectors such as construction and services were facing serious worker shortages that were curtailing activity. The BOJ's increasing focus on wage-driven inflation is another sign Japan is shedding its 25-year battle with deflation and economic stagnation. It also contrasts with former Governor Haruhiko Kuroda's insistence on using radical stimulus to fire up inflation. "The BOJ is becoming more convinced that wages and services prices will keep rising," said former BOJ top economist Seisaku Kameda, who is now executive economist at Sompo Institute Plus. "Its report, the language of its policy statement and the governor's comments all back up the case for more rate hikes." Mindful of the risk of an inflation overshoot, BOJ board members debated the chance of further interest rate hikes even after raising short-term rates to 0.5%, a summary of opinions at the January meeting showed. One opinion cited labour shortages as keeping inflation elevated, while another warned of the risk of "stagflation," where high inflation and low growth co-exist, the summary showed. The BOJ's hawkish tilt means markets may put greater focus on the bank's language around wage-driven inflation, rather than its views on consumption. "The BOJ is becoming increasingly mindful of how labour market conditions could be putting upward pressure on wages and prices, more than what its output gap estimate suggests," said Ryutaro Kono, chief Japan economist at BNP Paribas. "While the initial factor may have been the weak yen, the BOJ is beginning to recognise the risk of price rises turning into home-made inflation," he added. PERSISTENT PAIN Japan's rapidly ageing population has led to a dwindling pool of workers. The country faces a deficit of 3.4 million workers by the end of this decade and 11 million by 2040, according to a 2023 study by Recruit Works Institute. Kushikatsu Tanaka Holdings, which runs a restaurant chain nationwide, is among retailers suffering from chronic labour shortages, particularly in regional areas. "It's not as if we're suddenly facing shortage of staff - it's a permanent issue," an executive of the company told Reuters. "In regional areas, it's not even about hourly pay. There's a lack of people in the first place. We're trying to consolidate our outlets and shut those that are proving unprofitable." Keen to retain workers, Japanese companies agreed to an average 5.1% wage hike in 2024, the biggest increase in three decades, a union survey showed. In his speech on Thursday, BOJ board member Tamura said labour shortages were forcing hotels to reduce occupancy rates and meant some taxi operators had more cars than drivers. As central banks have no power to address supply constraints, their mandate remains squarely on combating subsequent inflationary pressure by raising interest rates. With stubbornly high raw material costs and labour shortages keeping inflation above the BOJ's target for nearly three years, markets are now re-assessing their view rates won't rise too much. Governor Kazuo Ueda said last month the BOJ's policy rate was still distant from levels deemed neutral to the economy, leaving scope for several more rate increases. BOJ staff estimates Japan's nominal neutral rate to be in a range of 1.0% to 2.5%. Having seen Japan's prolonged struggle with deflation, many analysts had bet the highest the BOJ could hike would be up to 1%. But building inflationary pressures may reduce the chance the BOJ will pause there. Growing market expectations that the BOJ's terminal rate could be higher have helped lift Japanese government bond yields to multi-year highs and propped up the yen. "There's no reason why markets should assume that rates won't rise beyond 1.0%, which is the bottom of the estimated range," said a source familiar with the bank's thinking. ($1 = 152.2700 yen)
