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Free Malaysia Today
2 days ago
- Business
- Free Malaysia Today
South Korea's new President Lee begins moves to tackle economic ‘crisis'
South Korean President Lee Jae-myung has vowed to immediately unleash fiscal spending of at least US$22 billion to boost economic growth. (EPA Images pic) SEOUL : South Korea's new President Lee Jae-myung held his first cabinet meeting today focused on devising an emergency package to address stagnating economic growth and aid households, moving swiftly to start tackling a top campaign pledge. Lee took office yesterday, just hours after riding a wave of anger over a brief martial law imposed by Yoon Suk Yeol to win the snap election. The attempt at military rule led to Yoon's ouster and sent shockwaves through Asia's fourth-largest economy. In brief remarks open to the media, Lee told the cabinet, carried over from the caretaker government put in place following Yoon's impeachment in December, that there was no time to waste in getting to work as the people were facing hardship. Lee has so far only nominated a close political ally and legislative veteran as prime minister and is racing to form a cabinet and staff his office to maintain continuity in administration. The new leader expressed bewilderment yesterday after walking into the presidential office to find it stripped of computers, printers and even pens and was quiet like 'a graveyard' with government officials who had been assigned there sent back to their posts. 'Most of the officials have been ordered back,' Lee's spokesman said today. Lee has made economic recovery one of his top priorities and vowed to immediately unleash fiscal spending of at least ₩30 trillion (US$22 billion) to boost growth, which was projected by the central bank in May to be almost half of its earlier estimate this year at 0.8%, down from 1.5% in February. Kim Min-seok, whose appointment as prime minister requires parliamentary approval, said yesterday that the country was facing even more economic turmoil than during the Asian financial crisis of 1997, complicated by unfavourable external factors. 'Today, the economy is heading downward and stagnating, which is why I believe it's much more difficult,' he told reporters. The previous government had made little progress in trying to assuage crushing US tariffs that would hit some of the country's major export-reliant industries, including autos, electronics and steel. 'Lee faces what could be the most daunting set of challenges for a South Korean leader in decades,' analysts said, ranging from healing a country deeply scarred by the martial law attempt to tackling unpredictable protectionist moves by the US. 'Today, Lee withdrew the nomination of two judges to the constitutional court, made by acting president Han Duck-soo before the election,' his office said. Lee previously said Han had no power to nominate judges as an unelected acting leader. The ruling Democratic Party-controlled parliament also passed today special counsel acts to investigate former president Yoon on insurrection charges and his wife Kim Keon Hee over corruption allegations. The party had previously passed the special counsel acts on multiple occasions, but they were repeatedly vetoed by Yoon and then the acting president. Yoon is currently facing a separate trial on insurrection charges.
CNA
2 days ago
- Business
- CNA
South Korea's new President Lee begins moves to tackle economic 'crisis'
SEOUL: South Korea's new President Lee Jae-myung held his first cabinet meeting on Thursday (Jun 5) focused on devising an emergency package to address stagnating economic growth and aid households, moving swiftly to start tackling a top campaign pledge. Lee took office on Wednesday just hours after riding a wave of anger over a brief martial law imposed by Yoon Suk Yeol to win the snap election. The attempt at military rule led to Yoon's ouster and sent shockwaves through Asia's fourth-largest economy. In brief remarks open to the media, Lee told the carry-over cabinet left by the caretaker government that was in place following Yoon's impeachment in December that there was no time to waste in getting to work as the people were facing hardship. Lee has so far only nominated a political ally and legislative veteran as prime minister and is racing to form a cabinet and staff his office to maintain continuity in administration. The new leader expressed bewilderment after entering the presidential office on Wednesday, saying it was stripped of computers, printers and even pens and was quiet like "a graveyard" with government officials who had been assigned there sent back to their posts. Lee has made economic recovery one of his top priorities and vowed to immediately unleash fiscal spending of at least 30 trillion won (US$22 billion) to boost growth, which was projected by the central bank in May to be almost half of its earlier estimate this year at 0.8 per cent, down from 1.5 per cent in February. Kim Min-seok, whose appointment as prime minister requires parliamentary approval, said on Wednesday the country was facing even more economic turmoil than during the Asian financial crisis of 1997, complicated by unfavourable external factors. "Today, the economy is heading downward and stagnating, which is why I believe it's much more difficult," he told reporters. The previous government had made little progress in trying to assuage crushing US tariffs that would hit some of the country's major export-reliant industries, including autos, electronics and steel. Lee faces what could be the most daunting set of challenges for a South Korean leader in decades, analysts said, ranging from healing a country deeply scarred by the martial law attempt to tackling unpredictable protectionist moves by the United States.
Reuters
2 days ago
- Business
- Reuters
South Korea's new President Lee begins moves to tackle economic 'crisis'
SEOUL, June 5 (Reuters) - South Korea's new President Lee Jae-myung held his first cabinet meeting on Thursday focused on devising an emergency package to address stagnating economic growth and aid households, moving swiftly to start tackling a top campaign pledge. Lee took office on Wednesday just hours after riding a wave of anger over a brief martial law imposed by Yoon Suk Yeol to win the snap election. The attempt at military rule led to Yoon's ouster and sent shockwaves through Asia's fourth-largest economy. In brief remarks open to the media, Lee told the carry-over cabinet left by the caretaker government that was in place following Yoon's impeachment in December that there was no time to waste in getting to work as the people were facing hardship. Lee has so far only nominated a political ally and legislative veteran as prime minister and is racing to form a cabinet and staff his office to maintain continuity in administration. The new leader expressed bewilderment after entering the presidential office on Wednesday, saying it was stripped of computers, printers and even pens and was quiet like "a graveyard" with government officials who had been assigned there sent back to their posts. Lee has made economic recovery one of his top priorities and vowed to immediately unleash fiscal spending of at least 30 trillion won ($22 billion) to boost growth, which was projected by the central bank in May to be almost half of its earlier estimate this year at 0.8%, down from 1.5% in February. Kim Min-seok, whose appointment as prime minister requires parliamentary approval, said on Wednesday the country was facing even more economic turmoil than during the Asian financial crisis of 1997, complicated by unfavourable external factors. "Today, the economy is heading downward and stagnating, which is why I believe it's much more difficult," he told reporters. The previous government had made little progress in trying to assuage crushing U.S. tariffs that would hit some of the country's major export-reliant industries, including autos, electronics and steel. Lee faces what could be the most daunting set of challenges for a South Korean leader in decades, analysts said, ranging from healing a country deeply scarred by the martial law attempt to tackling unpredictable protectionist moves by the United States. He spoke to the country's top military leader on Wednesday as his first official event. ($1 = 1,359.2000 won)
CNA
15-05-2025
- Business
- CNA
Japan's fiscal woes put BOJ bond taper plans to test
TOKYO: Talk of big fiscal spending and a subsequent spike in super-long yields are raising questions over just how quickly the Bank of Japan can taper its bond purchases, adding to the challenges it faces in removing remnants of its massive monetary stimulus. While the BOJ is unlikely to ramp up bond buying, the rise in super-long yields could affect its decision on the pace and composition of future quantitative tightening (QT), say analysts and sources familiar with the central bank's thinking. "Having ditched yield curve control last year, long-term interest rates are no longer monetary policy tools for the BOJ," one of the sources said. "The key would be whether the rise in super-long rates affects yields for other maturity zones." Yields on super-long Japanese government bonds (JGB) have risen steadily since April even as those on other maturities remain stable, with the 40-year yield hitting a record high of 3.445 per cent on Thursday. While the rise is driven partly by dwindling demand from life insurers, it also reflects market expectations of Japan's worsening finances as lawmakers escalate calls for huge spending and tax cuts ahead of an upper house election slated for July. "Investors are shunning super-long bonds on worries about Japan's fiscal problems. That's eroding liquidity and causing market distortions unseen in the past," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management. While the BOJ's QT plan is unlikely to have a direct effect on its rate-hike path, a spike in bond yields could hurt business confidence and make it harder to convince the public of the need to push up short-term borrowing costs. The market rout comes at a delicate time for the BOJ, which will review at next month's policy meeting an existing QT programme running through March, and come up with a bond taper plan for April 2026 onward. Under the current plan laid out last year, the BOJ has been slowing bond purchases by around ¥400 billion (US$2.74 billion) per quarter to halve monthly buying to ¥3 trillion by March 2026 - a pace that will diminish the bank's US$3.9 trillion balance sheet by up to 8 per cent. Next week, the BOJ will conduct consultations with banks, insurers and other market participants for their views on the desirable pace of tapering. The findings will serve as a basis for the board's decision on the QT plans at the Jun 16-17 rate review. NO QUICK FIX The QT plan is a crucial part of the central bank's strategy to wean the economy off decades of ultra-loose monetary policy. After a fairly smooth start with an end to negative rates and bond yield control last year, its policy normalisation has been disrupted by US President Donald Trump's tariffs, which are expected to cause some delay in raising short-term rates from 0.5 per cent. Many analysts expect the central bank to make no change to its current QT plan, and roughly maintain or slightly slow the pace of tapering from fiscal 2026, to avoid upending markets. The recent spike in super-long bond yields could draw calls from market participants for the BOJ to fine-tune the composition of the bonds it buys. It may also discourage the BOJ from pursuing a faster taper in future QT plans, analysts say. Taking note of the "significant rise" in super-long yields, one board member said the BOJ must pay attention to liquidity conditions for each maturity at the June QT review, according to a summary of opinions at the April 30-May 1 meeting. "The hurdle for changing the current taper size is extremely high," though the rise in super-long yields could affect discussions on future QT plans, another source said. As with the existing QT plan, the new programme extending beyond April will seek to give markets predictability on the tapering pace, while leaving the BOJ some flexibility in adjusting purchases, the sources said. That may prove tricky if market distortion persists, or leads to a broader bond sell-off driven by waning market trust over Japan's finances, analysts say. Although Prime Minister Shigeru Ishiba has resisted calls to cut the consumption tax rate, he is under pressure from within his party to compile a fresh spending package - a move that will add to Japan's huge public debt. Mari Iwashita, executive rates strategist at Nomura Securities, points to structural factors that may keep bond markets fragile, such as the BOJ's diminishing presence, waning appetite for super-long bonds and a political over-reliance on fiscal spending.
CNA
15-05-2025
- Business
- CNA
Analysis:Japan's fiscal woes put BOJ bond taper plans to test
TOKYO :Talk of big fiscal spending and a subsequent spike in super-long yields are raising questions over just how quickly the Bank of Japan can taper its bond purchases, adding to the challenges it faces in removing remnants of its massive monetary stimulus. While the BOJ is unlikely to ramp up bond buying, the rise in super-long yields could affect its decision on the pace and composition of future quantitative tightening (QT), say analysts and sources familiar with the central bank's thinking. "Having ditched yield curve control last year, long-term interest rates are no longer monetary policy tools for the BOJ," one of the sources said. "The key would be whether the rise in super-long rates affects yields for other maturity zones." Yields on super-long Japanese government bonds (JGB) have risen steadily since April even as those on other maturities remain stable, with the 40-year yield hitting a record high of 3.44 per cent on Monday. While the rise is driven partly by dwindling demand from life insurers, it also reflects market expectations of Japan's worsening finances as lawmakers escalate calls for huge spending and tax cuts ahead of an upper house election slated for July. "Investors are shunning super-long bonds on worries about Japan's fiscal problems. That's eroding liquidity and causing market distortions unseen in the past," said Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management. While the BOJ's QT plan is unlikely to have a direct effect on its rate-hike path, a spike in bond yields could hurt business confidence and make it harder to convince the public of the need to push up short-term borrowing costs. The market rout comes at a delicate time for the BOJ, which will review at next month's policy meeting an existing QT programme running through March, and come up with a bond taper plan for April 2026 onward. Under the current plan laid out last year, the BOJ has been slowing bond purchases by around 400 billion yen ($2.74 billion) per quarter to halve monthly buying to 3 trillion yen by March 2026 - a pace that will diminish the bank's $3.9 trillion balance sheet by up to 8 per cent. Next week, the BOJ will conduct consultations with banks, insurers and other market participants for their views on the desirable pace of tapering. The findings will serve as a basis for the board's decision on the QT plans at the June 16-17 rate review. NO QUICK FIX The QT plan is a crucial part of the central bank's strategy to wean the economy off decades of ultra-loose monetary policy. After a fairly smooth start with an end to negative rates and bond yield control last year, its policy normalisation has been disrupted by U.S. President Donald Trump's tariffs, which are expected to cause some delay in raising short-term rates from 0.5 per cent. Many analysts expect the central bank to make no change to its current QT plan, and roughly maintain or slightly slow the pace of tapering from fiscal 2026, to avoid upending markets. The recent spike in super-long bond yields could draw calls from market participants for the BOJ to fine-tune the composition of the bonds it buys. It may also discourage the BOJ from pursuing a faster taper in future QT plans, analysts say. Taking note of the "significant rise" in super-long yields, one board member said the BOJ must pay attention to liquidity conditions for each maturity at the June QT review, according to a summary of opinions at the April 30-May 1 meeting. "The hurdle for changing the current taper size is extremely high," though the rise in super-long yields could affect discussions on future QT plans, another source said. As with the existing QT plan, the new programme extending beyond April will seek to give markets predictability on the tapering pace, while leaving the BOJ some flexibility in adjusting purchases, the sources said. That may prove tricky if market distortion persists, or leads to a broader bond sell-off driven by waning market trust over Japan's finances, analysts say. Although Prime Minister Shigeru Ishiba has resisted calls to cut the consumption tax rate, he is under pressure from within his party to compile a fresh spending package - a move that will add to Japan's huge public debt. Mari Iwashita, executive rates strategist at Nomura Securities, points to structural factors that may keep bond markets fragile, such as the BOJ's diminishing presence, waning appetite for super-long bonds and a political over-reliance on fiscal spending. "Such structural factors are irreversible, and not something the BOJ alone can fix," she said. ($1 = 146.1700 yen)
