Latest news with #Uchida
Business Times
2 days ago
- Business
- Business Times
BOJ may paint less gloomy view, signal rate-hike resumption
[TOKYO] The Bank of Japan (BOJ) is set to hold off raising interest rates on Thursday (Jul 31) but may offer a less gloomy view on the outlook after Tokyo's trade agreement with the US last week, signalling rate hikes may resume later this year. Receding global trade tensions following Sunday's agreement between the US and the European Union add relief for BOJ policymakers on the outlook of Japan's export-heavy economy. But the BOJ is likely to warn of lingering uncertainty on how US tariffs affect business activity with the hit to exports seen intensifying later this year, analysts say. 'It's very big progress that reduces uncertainty for Japan's economy – but obviously, some uncertainty remains,' BOJ Deputy Governor Shinichi Uchida said last week on the Japan-US trade deal. Uchida noted questions around how soon Washington strikes trade deals with other countries, how the tariffs affect domestic and global economies and how long it could take for the tariffs' effects to be seen in hard data. At the two-day meeting ending on Thursday, the BOJ is widely expected to keep short-term interest rates steady at 0.5 per cent. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Markets are focusing on the bank's quarterly outlook report and Governor Kazuo Ueda's post-meeting news conference for clues on the timing of the next rate hike. A Reuters poll, taken before last week's Japan-US trade deal announcement, showed a majority of economists expect the BOJ to raise rates again by year-end. In the quarterly report, the BOJ is likely to revise up this fiscal year's inflation forecast due to persistent rises in rice and other food costs, sources have told Reuters. The BOJ may also tweak its current view that risks to the price outlook were skewed to the downside, and offer a less gloomy view on the economy compared with the current one focused on tariff-induced risks, according to separate sources. The board is likely to maintain its view that inflation will durably hit its 2 per cent target in the latter half of its three-year projection period running through fiscal 2027, they said. In current projections made on May 1, the BOJ projects core consumer inflation to hit 2.2 per cent in fiscal 2025, before slowing to 1.7 per cent in 2026 and 1.9 per cent in 2027. Japan struck a trade deal with President Donald Trump last week that lowers US tariffs for imports of goods, including its mainstay automobiles, easing the pain for the export-reliant economy and clearing a key hurdle for further BOJ rate hikes. The positive development contrasts with the gloom that surrounded the economy on May 1, when the BOJ produced its current estimates amid heightened market volatility caused by Trump's April announcement of sweeping 'reciprocal' tariffs. The BOJ exited a decade-long, massive stimulus last year and raised its short-term policy rate to 0.5 per cent in January on the view that Japan was progressing towards durably achieving its price goal. With rising food costs hurting households and keeping inflation above its 2 per cent target for three years, some hawkish board members have highlighted mounting price pressures that could justify resuming rate hikes. REUTERS
Business Recorder
2 days ago
- Business
- Business Recorder
BOJ may paint less gloomy view, signal rate-hike resumption
TOKYO: The Bank of Japan is set to hold off raising interest rates on Thursday but may offer a less gloomy view on the outlook after Tokyo's trade agreement with the U.S. last week, signalling rate hikes may resume later this year. Receding global trade tensions following Sunday's agreement between the U.S. and the European Union add relief for BOJ policymakers on the outlook of Japan's export-heavy economy. But the BOJ is likely to warn of lingering uncertainty on how U.S. tariffs affect business activity with the hit to exports seen intensifying later this year, analysts say. 'It's very big progress that reduces uncertainty for Japan's economy - but obviously, some uncertainty remains,' BOJ Deputy Governor Shinichi Uchida said last week on the Japan-U.S. trade deal. Uchida noted questions around how soon Washington strikes trade deals with other countries, how the tariffs affect domestic and global economies and how long it could take for the tariffs' effects to be seen in hard data. At the two-day meeting ending on Thursday, the BOJ is widely expected to keep short-term interest rates steady at 0.5%. Markets are focusing on the bank's quarterly outlook report and Governor Kazuo Ueda's post-meeting news conference for clues on the timing of the next rate hike. A Reuters poll, taken before last week's Japan-U.S. trade deal announcement, showed a majority of economists expect the BOJ to raise rates again by year-end. In the quarterly report, the BOJ is likely to revise up this fiscal year's inflation forecast due to persistent rises in rice and other food costs, sources have told Reuters. The BOJ may also tweak its current view that risks to the price outlook were skewed to the downside, and offer a less gloomy view on the economy compared with the current one focused on tariff-induced risks, according to separate sources. The board is likely to maintain its view that inflation will durably hit its 2% target in the latter half of its three-year projection period running through fiscal 2027, they said. In current projections made on May 1, the BOJ projects core consumer inflation to hit 2.2% in fiscal 2025, before slowing to 1.7% in 2026 and 1.9% in 2027. Japan struck a trade deal with President Donald Trump last week that lowers U.S. tariffs for imports of goods including its mainstay automobiles, easing the pain for the export-reliant economy and clearing a key hurdle for further BOJ rate hikes. The positive development contrasts with the gloom that surrounded the economy on May 1, when the BOJ produced its current estimates amid heightened market volatility caused by Trump's April announcement of sweeping 'reciprocal' tariffs. The BOJ exited a decade-long, massive stimulus last year and raised its short-term policy rate to 0.5% in January on the view Japan was progressing towards durably achieving its price goal. With rising food costs hurting households and keeping inflation above its 2% target for three years, some hawkish board members have highlighted mounting price pressures that could justify resuming rate hikes.
New Straits Times
2 days ago
- Business
- New Straits Times
BOJ may paint less gloomy view, signal rate-hike resumption
TOKYO: The Bank of Japan (BOJ) is set to hold off raising interest rates on Thursday, but may offer a less gloomy view on the outlook after Tokyo's trade agreement with the United States last week, signalling rate hikes may resume later this year. Receding global trade tensions following Sunday's agreement between the US and the European Union add relief for BOJ policymakers on the outlook of Japan's export-heavy economy. But the BOJ is likely to warn of lingering uncertainty on how US tariffs affect business activity, with the hit to exports seen intensifying later this year, analysts say. "It's very big progress that reduces uncertainty for Japan's economy – but obviously, some uncertainty remains," BOJ Deputy Governor Shinichi Uchida said last week on the Japan-US trade deal. Uchida noted questions around how soon Washington strikes trade deals with other countries, how the tariffs affect domestic and global economies, and how long it could take for the tariffs' effects to be seen in hard data. At the two-day meeting ending on Thursday, the BOJ is widely expected to keep short-term interest rates steady at 0.5 per cent. Markets are focusing on the bank's quarterly outlook report and Governor Kazuo Ueda's post-meeting news conference for clues on the timing of the next rate hike. A Reuters poll, taken before last week's Japan-US trade deal announcement, showed a majority of economists expect the BOJ to raise rates again by year-end. In the quarterly report, the BOJ is likely to revise up this fiscal year's inflation forecast due to persistent rises in rice and other food costs, sources have told Reuters. The BOJ may also tweak its current view that risks to the price outlook were skewed to the downside, and offer a less gloomy view on the economy compared with the current one focused on tariff-induced risks, according to separate sources. The board is likely to maintain its view that inflation will durably hit its 2.0 per cent target in the latter half of its three-year projection period running through fiscal 2027, they said. In current projections made on May 1, the BOJ projects core consumer inflation to hit 2.2 per cent in fiscal 2025, before slowing to 0.7 per cent in 2026 and 0.9 per cent in 2027. Japan struck a trade deal with President Donald Trump last week that lowers US tariffs for imports of goods including its mainstay automobiles, easing the pain for the export-reliant economy and clearing a key hurdle for further BOJ rate hikes. The positive development contrasts with the gloom that surrounded the economy on May 1, when the BOJ produced its current estimates amid heightened market volatility caused by Trump's April announcement of sweeping "reciprocal" tariffs. The BOJ exited a decade-long, massive stimulus last year and raised its short-term policy rate to 0.5 per cent in January on the view Japan was progressing towards durably achieving its price goal. With rising food costs hurting households and keeping inflation above its 2.0 per cent target for three years, some hawkish board members have highlighted mounting price pressures that could justify resuming rate hikes.
Japan Times
5 days ago
- Business
- Japan Times
Japan's top pension fund keeps strategy amid volatility
The Government Pension Investment Fund plans to maintain its asset allocation targets even as a U.S. trade deal whipsaws financial markets and fiscal concerns pummel domestic government bonds. "Short-term moves in the market will not affect our management at all,' GPIF President Kazuto Uchida said in his first media interview since taking charge of the $1.7 trillion fund in April. "We need to monitor the global economy and the impact of tariffs but when you look at market conditions, there is no need to change our model portfolio.' As it seeks to ride out the latest surge in volatility, Japan's largest pension fund aims to enhance portfolio rebalancing with futures and analyze correlations between different assets. The GPIF, which splits assets evenly between stocks and bonds, incurred quarterly losses earlier this year on all four of its asset classes for the first time since 2022. Uchida said the latest trade deal between the U.S. and Japan should have a "positive impact' on the stock market. The Topix is headed for a record high after U.S. President Donald Trump announced he was reducing a threatened 25% tariff on Japan to 15%. The GPIF head also said the fund can cope with the recent spike in volatility of domestic debt. Yields have jumped amid concern that Prime Minister Shigeru Ishiba may hand off to a successor who increases government spending or reduces taxes. The fund has set up a team to study alternative investments, which it has increased rapidly since 2021. "If there are good opportunities, we will increase our holdings further but we need to be convinced that there will be excess returns. That is becoming difficult,' Uchida said. In addition to navigating short-term market fluctuations, GPIF is also taking a long-term view by expanding its focus on sustainability. An evolution of investment related to environmental, social and governance (ESG) strategies to address a wider set of objectives can help support returns and economic growth, according to Japan's pension fund, which ranks among the world's top green investors. ESG strategies are "evolving into sustainability, which addresses a wider range of themes,' Uchida said in an interview. "Whether it's the environment, society or corporate governance, improving these areas ultimately leads to the growth of the global economy, and the growth of capital markets.' GPIF held about ¥18.2 trillion ($123.6 billion) of assets tracking ESG indexes at the end of March — or 14.7% of the fund's equity investments — up from ¥17.8 trillion a year earlier, bucking a wider global trend of investors paring back their green exposure. ESG-labeled funds have experienced record outflows as funds shun a strategy that's struggled with below-average returns and political backlash, particularly in the U.S. Norway's $1.9 trillion Norges Bank Investment Management and GPIF are regarded as rare examples of major investors that are continuing to support sustainability-related strategies. "Incorporating sustainability into the investment chain and having all stakeholders consider it, this leads to long-term revenue growth for investors, as well as benefits for society as a whole, the economy as a whole — such as job creation, expansion and wage increases,' said Uchida. The fund issued new guidelines earlier this year backing sustainability-related investments and emphasized that managing risks is paramount to achieving long-term growth across portfolios. The Financial Services Agency said in December that it was discussing the timing and application of a framework for sustainability-disclosure standards.
Yahoo
6 days ago
- Business
- Yahoo
Dollar Supported by Reduced Trade Tensions and Higher Bond Yields
The dollar index (DXY00) today is up by +0.10%. The dollar is climbing today on reduced global trade tensions after the US agreed to a trade deal with Japan. Strength in T-note yields today has also improved the dollar's interest rate differentials. Gains in the dollar are limited after US existing home sales fell more than expected to a 9-month low. US June existing home sales fell -2.7% m/m to a 9-month low of 3.93 million, weaker than expectations of -0.7% to 4.00 million. More News from Barchart Dollar Falls due to Lower T-note Yields Dollar Weakens and Gold Rallies as T-note Yields Slide Will Metals Stay in the Spotlight Wednesday? Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Federal funds futures prices are discounting the chances for a -25 bp rate cut at 5% at the July 29-30 FOMC meeting and 58% at the following meeting on September 16-17. EUR/USD (^EURUSD) today is down by -0.24%. The euro is under pressure today from a stronger dollar. The euro is also weighed down by a Bloomberg report that stated the European Union plans to impose 30% tariffs on approximately $117 billion (100 billion euros) worth of US goods in the event that President Trump raises tariffs on EU goods if no trade deal with the US is reached by August 1. Swaps are pricing in a 1% chance of a -25 bp rate cut by the ECB at Thursday's policy meeting. USD/JPY (^USDJPY) today is down by -0.05%. The yen rose to a 1.5-week high against the dollar today after the US and Japan reached a trade agreement. The yen also garnered support today on hawkish comments from BOJ Deputy Governor Uchida, which pushed the 10-year JGB bond yield up to a 16-year high of 1.616%. This was prompted by his statement that the trade deal between the US and Japan brings the BOJ closer to raising interest rates. Higher T-note yields today are limiting gains in the yen. The upside in the yen in the near term may be limited due to concerns that the LDP's loss of its majority in Japan's upper house in Sunday's elections may lead to fiscal deterioration in Japan's government finances, as the government boosts spending and implements tax cuts. BOJ Deputy Governor Uchida said "uncertainty has receded" after a trade deal was made with Japan and the US, which will push the BOJ closer to a rate hike by boosting the prospects for suitable economic conditions. President Trump late Tuesday announced a trade deal with Japan that will impose 15% tariffs on US imports from Japan, lower than the 25% rate that had been previously flagged to start on August 1, while creating a $550 billion fund for Japan to make investments in the US. Japan also agreed to purchase 100 Boeing aircraft, increase its purchases of US rice by 75%, and buy $8 billion in other agricultural products, while raising its defense spending with American firms to $17 billion annually, from $14 billion. August gold (GCQ25) today is down -21.2 (-0.62%), and September silver (SIU25) is up +0.200 (+0.51%). Precious metals today are mixed, with Sep silver posting a contract high and nearest-futures (N25) silver posting a 14-year high. Gold prices fell from a 5-week high today and turned lower as global trade tensions eased after the US and Japan agreed to a trade deal. Dollar strength today and higher global bond yields are also weighing on precious metals. Hawkish comments today from BOJ Deputy Governor Uchida undercut precious metals when he said the trade deal between Japan and the US pushes the BOJ closer to a rate hike. Silver prices fell back from their best levels after US existing home sales fell more than expected to a 9-month low, a negative factor for industrial metals demand. Precious metals continue to receive safe-haven support from geopolitical risks, including the conflicts in Ukraine and the Middle East. Fund buying of precious metals continues to support prices after gold holdings in ETFs rose to a two-year high on Tuesday, and silver holdings in ETFs climbed to a three-year high on Tuesday. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
