goldissima
02-27-2006, 05:31 PM
Best of luck... but I assume that from fighting deflation for so long, ones eventually gets to fight hyperinflation. No?
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Dollar falls to 1-month low vs yen
KANA INAGAKI
Associated Press
TOKYO - The dollar fell to a one-month low against the yen as comments by government ministers suggested the Bank of Japan will face little opposition as it moves toward ending its super-easy monetary policy.
Government bond prices also fluctuated wildly, with five- and two-year bond yields touching their highest levels in more than five years.
Investors seemed mostly to be reacting to comments over the weekend by Economy Minister Kaoru Yosano, who said the economy was no longer in deflation, or a state of declining prices, and hinted the government may be giving a go-ahead for the Bank of Japan to tighten policy as the economy shows signs of recovery.
"We are no longer in deflation, in the classical sense of the word," Yosano said on public broadcaster NHK Sunday. "If conditions are met, I think it is all right for the BOJ to make the decision."
Chief Cabinet Secretary Shinzo Abe told reporters Monday that Yosano's views "should be highly respected," although he said some deflation remains.
Prices have been declining in Japan for about seven years, eroding corporate profits and paychecks and contributing to the nation's lengthy economic slump.
To spur a recovery, the Bank of Japan has maintained an extremely loose monetary policy - flooding the banking system with cash and keeping interest rates at zero - for the last five years. The Bank of Japan has made it clear that it won't change its policy until year-over-year price changes stabilize at zero or higher.
Last week, central bank governor Toshihiko Fukui told a Lower House financial committee that conditions for ending its policy are "gradually ripening."
In November and December, the nationwide core consumer price index rose 0.1 percent year-on-year, the first two-month run of price gains in almost eight years. January's CPI, to be released Friday, is expected to rise 0.4 percent on year, according to economists' predictions.
However, Japanese Prime Minister Junichiro Koizumi contradicted Yosano's assertion that deflation was vanquished, highlighting the debate over the issue.
"I cannot say we have overcome deflation," Koizumi told reporters Monday. Government officials in the past have urged the bank to go slow so as not to squelch the recovery.
Still, he denied any rift with the Bank of Japan.
"The government and the BOJ are working as one toward overcoming deflation," Koizumi said. "In line with this policy, I think the BOJ will make a judgment about what kind of measures are necessary."
Currency and bond traders interpreted the mixture of comments as signaling a conciliatory tone from the government as the central bank considers the timing of changing policy.
The yield on the two-year bond rose to a high of 0.520 percent in morning trading, a level not seen in more than five years, while the five-year yield jumped to 1.150 percent, the highest level since November 2000. The yields on both fell back as the day progressed. The yield on the benchmark 10-year bond finished Monday up 0.5 basis point at 1.600 percent.
In currency trading, the dollar fell as low as 115.68 yen, the lowest level since Jan. 26, before recovering to 116.16 yen in Tokyo trading.
Although the Bank of Japan is officially independent from the government, political opinion is known to influence central bank policy.
"The BOJ is not entirely independent, in the sense that it's going to 'go it alone' so to speak," said Stefan Worrall, economist at Credit Suisse First Boston Securities (Japan) Limited. "It would be very careful to receive the understanding of the members of the government.
"As far as what has been suggested over the weekend, with certain comments particularly from Mr. Yosano, the government is gradually giving a certain leeway or their understanding for the BOJ to start moving to end quantitative easing," he said.
With the signs of recovery and price gains, many expect the bank to start gradually reducing its injections into the banking system, making it harder for banks to lend money - a move that some economists believe could come as early as April.
If all goes well, that would be followed some months later by raising interest rates, economists say.
Vice Finance Minister Koichi Hosokawa said he is closely watching developments ahead of the central bank's March 8-9 policy board meeting.
"Japan remains under mild deflation and there's no change in the need for the government and the BOJ to work together" to beat deflation, Hosokawa told reporters.
http://www.miami.com/mld/miamiherald/business/national/13970429.htm?template=contentModules/printstory.jsp
© 2006 AP Wire and wire service sources. All Rights Reserved.
<hr>
Dollar falls to 1-month low vs yen
KANA INAGAKI
Associated Press
TOKYO - The dollar fell to a one-month low against the yen as comments by government ministers suggested the Bank of Japan will face little opposition as it moves toward ending its super-easy monetary policy.
Government bond prices also fluctuated wildly, with five- and two-year bond yields touching their highest levels in more than five years.
Investors seemed mostly to be reacting to comments over the weekend by Economy Minister Kaoru Yosano, who said the economy was no longer in deflation, or a state of declining prices, and hinted the government may be giving a go-ahead for the Bank of Japan to tighten policy as the economy shows signs of recovery.
"We are no longer in deflation, in the classical sense of the word," Yosano said on public broadcaster NHK Sunday. "If conditions are met, I think it is all right for the BOJ to make the decision."
Chief Cabinet Secretary Shinzo Abe told reporters Monday that Yosano's views "should be highly respected," although he said some deflation remains.
Prices have been declining in Japan for about seven years, eroding corporate profits and paychecks and contributing to the nation's lengthy economic slump.
To spur a recovery, the Bank of Japan has maintained an extremely loose monetary policy - flooding the banking system with cash and keeping interest rates at zero - for the last five years. The Bank of Japan has made it clear that it won't change its policy until year-over-year price changes stabilize at zero or higher.
Last week, central bank governor Toshihiko Fukui told a Lower House financial committee that conditions for ending its policy are "gradually ripening."
In November and December, the nationwide core consumer price index rose 0.1 percent year-on-year, the first two-month run of price gains in almost eight years. January's CPI, to be released Friday, is expected to rise 0.4 percent on year, according to economists' predictions.
However, Japanese Prime Minister Junichiro Koizumi contradicted Yosano's assertion that deflation was vanquished, highlighting the debate over the issue.
"I cannot say we have overcome deflation," Koizumi told reporters Monday. Government officials in the past have urged the bank to go slow so as not to squelch the recovery.
Still, he denied any rift with the Bank of Japan.
"The government and the BOJ are working as one toward overcoming deflation," Koizumi said. "In line with this policy, I think the BOJ will make a judgment about what kind of measures are necessary."
Currency and bond traders interpreted the mixture of comments as signaling a conciliatory tone from the government as the central bank considers the timing of changing policy.
The yield on the two-year bond rose to a high of 0.520 percent in morning trading, a level not seen in more than five years, while the five-year yield jumped to 1.150 percent, the highest level since November 2000. The yields on both fell back as the day progressed. The yield on the benchmark 10-year bond finished Monday up 0.5 basis point at 1.600 percent.
In currency trading, the dollar fell as low as 115.68 yen, the lowest level since Jan. 26, before recovering to 116.16 yen in Tokyo trading.
Although the Bank of Japan is officially independent from the government, political opinion is known to influence central bank policy.
"The BOJ is not entirely independent, in the sense that it's going to 'go it alone' so to speak," said Stefan Worrall, economist at Credit Suisse First Boston Securities (Japan) Limited. "It would be very careful to receive the understanding of the members of the government.
"As far as what has been suggested over the weekend, with certain comments particularly from Mr. Yosano, the government is gradually giving a certain leeway or their understanding for the BOJ to start moving to end quantitative easing," he said.
With the signs of recovery and price gains, many expect the bank to start gradually reducing its injections into the banking system, making it harder for banks to lend money - a move that some economists believe could come as early as April.
If all goes well, that would be followed some months later by raising interest rates, economists say.
Vice Finance Minister Koichi Hosokawa said he is closely watching developments ahead of the central bank's March 8-9 policy board meeting.
"Japan remains under mild deflation and there's no change in the need for the government and the BOJ to work together" to beat deflation, Hosokawa told reporters.
http://www.miami.com/mld/miamiherald/business/national/13970429.htm?template=contentModules/printstory.jsp
© 2006 AP Wire and wire service sources. All Rights Reserved.