Tag: BOJ

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Japan media revisit: Self-restraining getting out of control

TOKYO, April 29, 2024—On this second day of the ‘Golden Week’ holiday stretch, a morning radio show long known for unabashed comments caught my attention for restraining criticisms of the Bank of Japan, the central bank, and almost nonchalant views about rampant inflation bufett9ing Japanese taxpayers that resoundingly voted down all three candidates of prime minister Kishida’s Liberal Democratic Party in a lower house bi-election..

The regular commentator of the show, hosted by Takero Morimoto, explained the BOJ’s monetary policy, devoid of representing the outcries from both consumers and businesses or criticisms of the bank’s governor about the tumbling yen’s value against the U.S. dollar and other currencies. At the end of the clip, host Morimoto, sounding irritated, expressed frustration and nipped at the bank’s policy of maintaining its lax policy.

What caught my attention about the commentator’s views was that he sounded like wanting to defend the BOJ and governor, prompting me to find out that he is an editorial board member of Jiji Press, one of two Japanese wire services that focuses on financial market and economic coverage, including the central bank, and that his views were aired by the TBS broadcasting company, which is a closely affiliated with the Mainichi daily newspaper. Both Jiji and Mainichi pride themselves as the champions of Japan’s monetary policy coverage.

The commentator offered analysis of the April 28 by-election of three lower house LDP and LDP-in-kind lawmakers that were forced out or resigned from parliament for campaign financing and other irregularities. Kishida’s LDP was defeated in the three races miserably, and the commentator attributed the results to the scandals only – while voters interviewed before casting ballots voiced loudly about rising consumer goods prices and soaring gasoline prices, especially those living in rural areas where cars are one of vital social infrastructure.

Businesses also have been urging the government and the central bank to shore up the yen’s value, only to be given deaf ears.

If Mr. Morimoto’s show has lost teeth, there’s hardly any media outlets that Japanese consumers can tune in to as they long ago abandoned Japanese television as news sources.

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It’s all up, up, up in Japan’s new business year, fanned faster by tourists

TOKYO, April 12, 2024–April 1 is the first day of Japan’s new business year. Young people starting work for the first time and students entering school are welcomed at entrance ceremonies against the backdrop of cherry flower pedals play in the spring breeze. People, fauna and flora and houses all look being uplifted and smiling.

Not this spring.

The weather was nasty. Strong, cold, typhoon-grade powerful winds with occasional downpour, clearly a climate change impact, ruthlessly whipped them all, disabling ceremonies and ubiquitous sakura (cherry) flower parties under the open skies. 

Even more chilling than the frigid spring for people was what economists termed a inflation third wave carrying goods and service prices of all conceivable items, from more than 2,800 groceries, parcel delivery fees, National Health Insurance premiums for people over 75 years, ending of government subsidies for Covid-19 vaccines, NHI premium surcharges to finance proactive child birth programs. Numerous other prices and fees have gone up, such as museum and park admissions.

The hike, which began two years ago, has roughly doubled Japan’s grocery inflation to date and restaurant prices even more, economist said.

The third wave rise coincided with the country’s most popular tourism season, though the fowl weather appeared to have preempted the over-crowing of popular tourist spots such as Kyoto. And yet, the tourist season just started, with more than 20 million Japanese people projected to travel during the late-April to May 5 Golden Week vacation period.

Most starred hotels are filling up and the effect is rippling to so-called business hotels, the accommodations for local traveling workers, where rates have nearly doubled year-on-year.

The bottomline: combined with the yen’s fresh decent against the U.S. dollar and other key currencies, Japan’s CPI inflation is threatening to go sharply higher over the country’s target inflation of 2 percent.

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BOJ’s Ueda isn’t the only central banker succumbed to political pressure

TOKYO, March 21, 2024—On a cold February evening, Japan’s most prestigious private club was quiet as usual as a few small groups of mostly ex-Japaneses bureaucrats sat cozily in the bar chairs sipping cocktails and discussing global politics and economy almost inaudibly. Kazuo Ueda walked in to the premises flanked by his board members and instead of going to the bar, he was hastily ushered into a private dining room. Those accompanying him did not want people to come close to Ueda, let alone chat with him.

Ueda is not alone. He was joined by Federal Research chairman Jerome Powell on March 20, 2024.

Before he became the Bank of Japan governor, reportedly on his own will, on April 9, 2023, 72-year-old Ueda was known as a frequent visitor to Tokyo’s Ginza and Roppongi night life districts. After his 5-year central banker term began, he has been surrounded by dark-suited vice governors and advisors instead of night club hostesses.

Ueda announced on March 19, 2024 that the Japanese central bank was ending its negative short-term interest monetary policy for the first time since the bank took the policy in April 2013 as a means of shoring up the Japanese economy from deflation.

Over the intervening years, that translated into a weak yen against the U.S. dollar, euro and other currencies, and the impact has has been showing up in crawling goods prices, un-visible to casual eyes. After the Covid-19 pandemic erupted in 2020, the bank further relaxed monetary policy whole the government pumped trillions of yen to businesses in distress. And in 2023, businesses began raising wages by a few percentage points, and in 2024 doubled what they raised in 2023. By headline anecdotes, Japan’s consumer prices nearly doubled over the pst two years.

Compounding the price pressure, a massive influx of foreign tourists filled up hotels, restaurants, and other tourist spots, and the CPI upward trend gained impetus.Businesses and consumers say that Japan has entered a new round of inflation.

Against this backdrop, Ueda on March 19 made the announcement to to end the negative rate policy but he emphasized that the bank’s next policy move depends on whether CPI will continue above 2 percent sustainably and dismissed further tightening. Why is he so adamant about refusing to tighten further when taxpayers are complaining about rising goods and service prices? Ueda the scholar is surrounded by bureaucrats who prioritize inflation over price stability partly because a more visible interest rate rise requires additional issuance of Japanese government bonds. A one percent rate rise demands about 40 trillion yen (266 billion) fresh JGB issuance.

It’s the pressure Ueda is feeling from the Japanese bureaucracy, and on top of it, pressure from politicians to help sustain the spiraling stock market surge that rely on campaign finances and other forms of political money from big businesses at a time when the ruling party of prime minister kishida is being rocked by financial scandals and he may call for a general election.

It’s a similar election-related political pressure Fed Chairman Powell is feeling now, the reason why he said about three rate cuts this year. Political pressure is that powerful now that central bank independence is being eroded, almost replaced by policy to accommodate money rolling machines.

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