Latest news with #RyozoHimino
Zawya
7 days ago
- Business
- Zawya
Fed's Williams calls for strong response if inflation deviates from target
TOKYO: New York Federal Reserve President John Williams said on Wednesday central banks must "respond relatively strongly" when inflation begins to deviate from their target. Given high uncertainty around the economic impact of U.S. tariffs and trade policy, central banks should focus on avoiding taking steps where the "cost of getting it wrong far outweighs the benefits," rather than aiming for the perfect solution to the problem, he said. Among the costly risks central banks must avoid are to allow inflation expectations to deviate from their targets, Williams said in a fireside chat with BOJ Deputy Governor Ryozo Himino at the central bank's conference held in Tokyo. "You want to avoid inflation becoming highly persistent because that could become permanent," Williams said. "And the way to do that is to respond relatively strongly" when inflation begins to deviate from the central bank's target, he added. Williams said shocks typically do not have long-lasting effects on inflation as long as inflation expectations are well anchored. But he warned there was always uncertainty on how supply-side shocks, such as those caused by the COVID-19 pandemic, could affect public perceptions on future price moves. "Uncertainty has risen pretty significantly," he said "We have to be very aware that inflation expectations could shift in any way that could be detrimental." Given such uncertainties, central banks must strive to not just anchor long-term inflation expectations, but ensure shorter-term expectations are "well behaved" so that public perceptions of future price moves emerge back towards central bank targets "within several years," Williams said. U.S. President Donald Trump's sweeping tariffs and erratic trade policies have complicated central bankers' task of keeping inflationary pressure in check, without cooling too much economies already facing the damage from higher levies. The Fed has kept its policy rate unchanged at 4.25%-4.50% since December, as officials pause for more clarity on the economic and price impact of Trump's tariffs. Policymakers are also having to grapple with volatile market moves caused by Trump's on-and-off comments on U.S. trade negotiations with other countries. While global financial markets experienced "huge shocks" and volatility in April after Trump's announcement of sweeping reciprocal tariffs, they did not see a "dissolution," Williams said. "One of the things you definitely saw in April was a lot of flow between buyers and sellers," which was a sign markets were functioning, he added. The level of reserves in the U.S. is "clearly abundant" judging by many metrics the New York Fed monitors, and serves as a buffer against unforeseen shocks, Williams said. "When you get big shocks and you're seeing unanticipated shocks, it's really nice that there's a buffer" that absorb the market ramifications, he added.
Reuters
7 days ago
- Business
- Reuters
Fed's Williams calls for strong response if inflation deviates from target
TOKYO, May 28 (Reuters) - New York Federal Reserve President John Williams said on Wednesday central banks must "respond relatively strongly" when inflation begins to deviate from their target. Given high uncertainty around the economic impact of U.S. tariffs and trade policy, central banks should focus on avoiding taking steps where the "cost of getting it wrong far outweighs the benefits," rather than aiming for the perfect solution to the problem, he said. Among the costly risks central banks must avoid are to allow inflation expectations to deviate from their targets, Williams said in a fireside chat with BOJ Deputy Governor Ryozo Himino at the central bank's conference held in Tokyo. "You want to avoid inflation becoming highly persistent because that could become permanent," Williams said. "And the way to do that is to respond relatively strongly" when inflation begins to deviate from the central bank's target, he added. "We have to be very aware that inflation expectations could shift in any way that could be detrimental," he said.
Wall Street Journal
31-01-2025
- Business
- Wall Street Journal
JGBs Fall Amid Fears of Further BOJ Rate Increases
0211 GMT — JGBs fall in early Tokyo trading amid fears of further BOJ rate increases. BOJ Deputy Gov. Ryozo Himino made hawkish comments in his speeches on Jan. 14 and 30, saying, 'I think it is not normal for real rates to remain clearly negative for a long time,' according to Citi Research's Katsuhiko Aiba. If this is the view of key BOJ officials, it suggests that they are currently assuming the nominal policy rate will be at least 2% after 2% inflation is achieved, the economist says in a note. This is much higher than the 1% terminal rate markets are pricing in, Aiba adds. The 10-year JGB yield is up 1.5 bps at 1.225%. (
Zawya
30-01-2025
- Business
- Zawya
Yen rallies against euro, dollar as rate outlooks diverge
The yen made broad gains on Thursday as Japan looks on track to keep raising interest rates while others cut, with the European Central Bank reducing borrowing costs by a further 25 basis points on Thursday. The yen was the notable mover in currency markets, with the dollar down 0.69% to 154.13 yen and the euro falling 0.81% to 160.38 yen. The single currency dipped 0.16% against the dollar to $1.0403 after data showed Germany's economy shrank more than expected in the fourth quarter. It showed little reaction to the ECB's widely expected rate cut. The central bank kept the door open to further policy easing as concerns over a lacklustre economy supersede worries about persistent inflation. "The ECB's decision to cut its deposit rate from 3% to 2.75% today came as no surprise and the accompanying statement implies that more cuts are coming, as is widely anticipated," said Jack Allen-Reynolds, deputy chief euro zone economist at Capital Economics. "We think the Bank will have to lower interest rates further than most investors expect." Markets are priced for further ECB cuts in March, April and June, with about 90 basis points of easing implied for 2025. In contrast, Bank of Japan Deputy Governor Ryozo Himino said on Thursday that Japan's central bank would continue to raise interest rates if the economy and prices move in line with the bank's forecasts. The dollar index was little changed at 107.97 after ticking up slightly overnight, when the Federal Reserve paused its easing cycle. The index tracks the U.S. currency against six major peers. Data on U.S. advance GDP showed the economy grew at a 2.3% annualised rate in the fourth quarter of 2024, down from 3.1% in the third quarter and below analysts' expectations of a 2.6% expansion rate. PARSING POWELL The dollar briefly popped higher overnight when the Fed dropped a reference to making "progress" on inflation, which was taken as hawkish. Yet Chair Jerome Powell used his press conference to say progress was still being made and rates were "meaningfully" above neutral, implying there was still plenty of scope to cut. As a result, Fed fund futures still imply around 48 basis points of easing this year, broadly unchanged from earlier in the week. The next move is not expected until June. The Fed's pause came as Canada and Sweden both cut rates by a quarter point overnight, but removed guidance on future easing, noting uncertainty about U.S. tariff policy. Howard Lutnick, U.S. President Donald Trump's nominee to run the Commerce Department, said on Wednesday that Canada and Mexico could avoid looming U.S. tariffs if they acted swiftly to close their borders to fentanyl. Going the other way on rates, Brazil's central bank hiked by a full percentage point to 13.25% overnight and flagged more to come. The attraction of such high yields has seen the real rally around 5% since the start of the year. Elsewhere, the pound was down 0.1% at $1.2433, while the Australian dollar fetched $0.622, also down 0.1%. (Reporting by Wayne Cole in Sydney and Harry Robertson in London. Editing by Michael Perry, Mark Potter and Alex Richardson)
Bloomberg
30-01-2025
- Business
- Bloomberg
Yen Strengthens Against Dollar Ahead of BOJ Himino's Speech
The yen extended gains and Japanese government bond yields rose as traders priced a potentially hawkish steer from Bank of Japan Deputy Governor Ryozo Himino's speech on Thursday. The Japanese currency strengthened as much as 0.6% to 154.32 against the dollar, and was the best performer against the US currency among its Group-of-10 peers. JGB futures dropped as much as 31 ticks to 140.84. The moves also came after the BOJ took steps to shrink its balance sheet.
