Buying government bonds with longer maturities should be an option for the Bank of Japan if the European debt crisis worsens said a former deputy governor seen as a potential candidate to take the reins at the central bank.
TOKYO — The Japan government’s nominee to be the next central bank governor outlined more forceful policy prescriptions on Monday to finally defeat deflation, saying he would not set any limits on the amount of cash the Bank of Japan pumps into the economy.
Underlining expectations he would be an aggressive governor, Haruhiko Kuroda told lawmakers the BOJ’s current policies were not powerful enough to boost inflation to 2 percent, a target he said the central bank should strive to achieve in two years.
With skepticism rising with every passing day that Japan's monetary dead end could mean the BOJ is forced to be the first developed central bank to admit outright policy failure, resulting in suggestions for a "massive stimulus program" and "creating shock and awe at this point in the cycle", ove
It is no secret that unlike other banks who, while directly intervening in the bond market only manipulate equity prices in relative secrecy (usually via HFT-transacting intermediaries such as Citadel), the Bank of Japan has historically had no problem with buying equities outright, traditionally in the form of REITs and equity-tracking ETFs.
As Citi's Todd Elmer notes, today's BoJ outcome looks far closer to 'shock and awe' than disappointment. It appears the BoJ's actions may speak as loud as their words for now - JPY is weakening and the Nikkei is rallying after Kuroda's last shot at a first impression appeared to beat expectations (covering for disappointing macro data - despite six months of jawboning and a 20% devaluation).
It wasn't until a week ago that the loud calls for the Bank of Japan to do much more easing came loud and strong, because it was last Wednesday when Goldman announced it had changed its base-case scenario from one of a June easing to making "easing in April our base-case scenario, given the rising risk that business confidence has been dented by recent financial market instability and the Kumamoto earthquakes, and in view of BOJ governor Haruhiko Ku
We’ve long said that a dramatic and sustained spike in JGB yields would be catastrophic for Japan, whose central bank is onboarding the entirety of gross issuance onto its balance sheet and whose government is running what is effectively the largest ponzi scheme the world has ever known. Here’s WSJ summing up the situation:
Marc Chandler submits:There has been an obvious build-up of expectations about the U.S. jobs report today. The dramatic jump in the ADP estimate sparked a large upward revision in expectations, even though the shortcomings of its estimate and its track record are well known. In part, the optimism also reflects the recent string of data that has convinced even many of the cynics that the U.S. economy has accelerated.
As all eyes, ears, and noses anxiously await the scantest of dovishness from Kuroda and The BoJ tonight (despite numerous hints that they will not unleash moar for now), the data that was just delivered may have helped the bad-news-is-good-news case. Most notably Japanese household spending dropped 0.4% YoY (with tax hike issues out of the way) missing expectations by a mile as the 'deflationary' mindset remains mired in Japanese heads.