When it comes to changing the "measurement" rules in the middle of the game, nobody does it quite like Japan: in the aftermath of the Fukushima nuclear explosion, when radiation was soaring (and still is with Tritium levels just hitting a record high but who cares - Goldman partners have to earn record bonuses on the back of the irradiated island) Japan's solution was simple: double the maximum safe irradiation dosage. Done and done.
Bank of Japan to Adopt 2% Inflation Target
Bloomberg reports Yen Falls to Lowest Since 2010 on Stimulus
The yen reached the weakest since June 2010 versus the dollar after Japanese Prime Minister Shinzo Abe’s government said it will spend 10.3 trillion yen ($116 billion) in new stimulus efforts that tend to weaken a currency.
Financial Times reported that Bank of Japan has started an open monetary easing in attempt to put an end to the years lasting corrosive deflation. On Tuesday the bank announced its goals to achieve a rate of 2% inflation, twice as much as its current rate of 1%. The campaign will be much like the US Federal Reserve’s policy of “limitless stimulus”.
Inflation is not just a pressure for businesses trading at home – it has a strong influence on the price of imported materials as well as the profitability of exported goods.
As we have seen in the UK, the concern of late has been higher than desired inflation. The Bank of England has a target of keeping inflation at 2 per cent, however the latest reading has it creeping up to almost 3 per cent.
By Tom Lydon:
By John Spence & Tom Lydon
CurrencyShares Japanese Yen Trust (FXY) nosedived more than 2% on Thursday after the Bank of Japan unveiled a bold new plan to fight deflation including new easing measures that stunned the market.The central bank said it plans to double its holdings of government bonds and ETFs the next two years.
Kudos to Kyle Bass at Hayman Advisers for warning that the Bank of Japan would lose control of its 70 trillion bond buying blitz. The spike in the 10-year yield to 1pc on Thursday was certainly shocking to behold.