Connect with us

Economy

BOJ policymakers unwavering on easy policy stance – March meeting minutes

Published

on


© Reuters. FILE PHOTO: A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan, May 22, 2020. REUTERS/Kim Kyung-Hoon

By Leika Kihara

TOKYO (Reuters) – Bank of Japan (BOJ) policymakers remained unwavering in their resolve to keep massive monetary stimulus, even as some saw signs of change in the country’s low-inflation environment, minutes of their March policy meeting showed on Monday.

Several in the nine-member board said some big firms were raising wages and companies were more eagerly passing on rising raw material costs to households, which could put upward pressure on consumer inflation, the minutes showed.

Japan’s consumer prices rose the fastest among major advanced economies during the global inflationary cycle in the 1970s, which meant there was always a chance inflation could spiral higher once price hikes broaden, one member noted.

But most others in the board warned of heightening risks to Japan’s economy from the Ukraine crisis that would keep inflationary pressure subdued, the minutes showed.

“Unlike the United States and the United Kingdom, Japan was not in a situation where the inflation rate would likely exceed the BOJ’s 2% price target in a sustained manner,” some members were quoted as saying in the minutes.

“It was therefore important for the BOJ to continue with monetary easing to support the economy’s recovery from the pandemic,” they said.

One member said the BOJ might even need to guard against a downturn in prices from the latter half of fiscal 2022 given uncertainty over the global economic and commodity price outlook, the minutes showed.

The remarks underscore a dominant market view the BOJ will remain an outlier in the global shift towards tighter monetary policy, with little sign of a clear pick-up in wages.

Data released on Monday showed real wages shrank in March for the first time in three months, a sign salaries weren’t rising enough to make up for higher living costs.

The BOJ maintained its massive stimulus at the March 17-18 meeting. At a subsequent meeting in April, it raised this year’s inflation forecast, but stuck to ultra-low interest rates and guidance to sustain easy policy.

Many analysts expect Japan’s core consumer inflation to exceed 2% from April onward mainly on rising fuel costs. The BOJ has said it won’t tighten policy unless such cost-push inflation leads to broader price rises accompanied by higher wages.

Economy

Sri Lanka central bank holds rates; reiterates need for political stability

Published

on


© Reuters. FILE PHOTO: People walk past the main entrance of the Sri Lanka’s Central Bank in Colombo, Sri Lanka March 24, 2017. REUTERS/Dinuka Liyanawatte

By Uditha Jayasinghe and Swati Bhat

COLOMBO (Reuters) -Sri Lanka’s central bank held its key interest rates steady on Thursday following a massive 700 basis points increase at its previous meeting and reiterated the need for more fiscal measures and political stability in the crisis-hit economy.

The Standing Lending Facility rate remained unchanged at 14.50% while the Standing Deposit Facility Rate was steady at 13.50%.

“It is envisaged that the recent tightening of monetary conditions and the strengthening of monetary policy communication will help anchor inflation expectations of the public in the period ahead,” the bank said in a statement https://www.cbsl.gov.lk/sites/default/files/cbslweb_documents/press/pr/press_20220519_Monetary_Policy_Review_No_4_2022_e.pdf.

The measures taken so far, “would continue to be further transmitted to the financial markets, while some signs of tighter monetary policy already being observed in real economic activity,” it added.

The CSE All Share index was trading down 0.9% at 0530 GMT, after earlier falling as much as 1.4%. There were no trades in the rupee. Traders said they were awaiting comments from the central bank governor at a post policy media briefing.

The central bank said inflation will remain elevated in the near term due to supply-side pressures while economic growth will also record a setback.

The nation of 22 million people is battling a devastating economic crisis as tax cuts by President Gotabaya Rajapaksa drained government coffers, COVID-19 hit the lucrative tourism industry and rising oil prices emptied foreign exchange reserves.

Foreign reserves have plunged to almost zero, leaving Colombo struggling to pay for such essentials as fuel, medicines and food.

“In terms of credibility of policy…keeping rates unchanged is not good in my view,” said Thilina Panduwawala, head of economic research at Frontier Research.

“But from an operational angle, given how tough the rates adjustment is for corporates and financial institutions is after a such large hike in April, I assume they saw fit to give the system time to adjust amidst the political uncertainty”.

Inflation hit 29.8% in April with food prices expanding by 46.6% year-on-year in the island nation.

The policy measures implemented by the central bank need to be reinforced by adequate and timely policy adjustments by the government, the bank said.

“Urgent measures are required to restore greater political stability through consensus governance and social harmony,” it wrote.

Central bank Governor P. Nandalal Weerasinghe told reporters earlier this month that without a political solution to the current crisis, the bank’s steps to revive the economy would not be successful and he would resign unless there was stability in two weeks.

Continue Reading

Economy

Investors jolted as U.S. retailers show inflation hitting consumers

Published

on


© Reuters. FILE PHOTO: Shoppers are seen wearing masks while shopping at a Walmart store, in North Brunswick, New Jersey, U.S. July 20, 2020. REUTERS/Eduardo Munoz/File Photo

By Sinéad Carew

NEW YORK (Reuters) – The evidence of red-hot inflation seeping into the economy is sending a chill through investors after major U.S. retailers showed people are cutting back on buying bigger ticket items as they just try and get by.

Investors wiped almost 25% off Target (NYSE:TGT) shares on Wednesday after its profit halved as it had to discount bigger items, and Walmart (NYSE:WMT) has dropped more than 17% since it reported weak results early on Tuesday.

Target’s earnings showed consumers spending more on food and household essentials instead of high-margin discretionary items while Walmart showed shoppers moved to buy lower-margin basics.

Investors will on Thursday be focused on earnings due from Kohl’s (NYSE:KSS), which fell 11% on Wednesday and BJ’s Wholesale Club, which fell 16%.

The turmoil came a day after Federal Reserve Chair Jerome Powell pledged the U.S. central bank would ratchet interest rates as high as needed to kill a surge in inflation.

“Retailers are starting to reveal the impact of eroding consumer purchasing power,” said Paul Christopher, head of global market strategy at Wells Fargo (NYSE:WFC) Investment Institute, on the same day his firm forecast a mild recession around year-end into early 2023.

“The consumer’s ability to spend is eroding at a faster pace than it was a month or two ago. We think that pace is going to accelerate further,” he said.

Wednesday’s sell-off saw the S&P 500 close down 4% on the day, 17.7% for the year-to-date and down 18.2% from its Jan. 3 record close. [.N]

The benchmark index’s consumer discretionary index lost 6.6% for its deepest one-day sell-off since March 2020 and is off 30.8% so far for 2022, putting it on track for its weakest year since 2008.

Cantor Fitzgerald said it was unwinding its expectation for a short-term bounce in equities and that if there is a lift, it would likely be shallow and “not worth playing.”

“The (Wal-Mart/Target) numbers are very concerning as they show the consumer is reducing discretionary purchases while company margins return to pre-pandemic levels,” said Eric Johnston, head of equity derivatives and cross asset at Cantor Fitzgerald.

While investors have been worried for some time about inflation, the latest results pile on worries about the impact of inflation on the consumer, said Ryan Detrick, chief market strategist at LPL Financial (NASDAQ:LPLA).

However, the sell-off came the day after data showing U.S. retail sales rose strongly in April as consumers bought more motor vehicles amid supply improvements along with increased spending at restaurants despite high inflation, souring consumer sentiment and rising interest rates.

Cliff Hodge, chief investment officer at Cornerstone Wealth said the narrative was “shifting from inflation scare to recession scare.”

Chuck Carlson, chief executive officer at Horizon Investment Services said retailer results appeared to be potentially “one more indication of perhaps a slowdown in the economy.”

“I just wonder if people are starting to really get pinched by fuel costs – both businesses as well as consumers … When you are paying north of $5 for a gallon of gas, that’s a hammer and that’s a hammer on everybody,” Carlson said.

Continue Reading

Economy

Aussie jumps, safe-haven dollar and yen ease amid Shanghai reopening signs

Published

on

2/2

© Reuters. FILE PHOTO: U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration//File Photo

2/2

By Kevin Buckland

TOKYO (Reuters) – The safe-haven dollar and yen eased on Thursday while the Australian and New Zealand dollars jumped amid signs of an easing in Shanghai’s coronavirus lockdown, although sentiment remained fragile as global equities sold off.

Shanghai will allow more businesses in some areas to resume normal operations from the start of June, an official said, stirring hopes for an end to a crippling weeks-long lockdown under the government’s strict zero-COVID policy.

That helped lift the mood in a market that was badly bruised on Wednesday by mounting concerns that aggressive tightening by the Federal Reserve and other global central banks could choke growth.

The Aussie gained 0.8% to $0.7008, just above the psychologically important 70 cent level, getting additional support from a tick down in Australian unemployment to the lowest in almost half a century. Overnight, the currency had retreated 1.1% from a high of $0.7046.

New Zealand’s kiwi bounced 0.6% to $0.6334, after losing 1.1% overnight from a top of $0.6370.

Preeminent haven currency the yen slid, with the dollar adding 0.48% to 128.845 yen after a 0.86% tumble on Wednesday.

The dollar index, which tracks the greenback against six major peers, edged 0.16% lower to 103.63, after a 0.55% jump overnight that ended a three-day losing streak.

Despite the moves in foreign exchange markets, a 1.9% slide in Asian stocks was evidence that risk aversion was still front of mind, a day after a 4% drop for the S&P 500 and a 5% plunge for the Nasdaq, said Ray Attrill, head of currency strategy at National Australia Bank (OTC:NABZY).

“Zero-COVID is here to stay, so to me the China outlook is no less grim today than it was yesterday,” he said.

“The macro backdrop that is supporting the dollar, either on relative interest rate grounds or on risk aversion, one or other of those forces is going to remain in play for the time being, so I don’t see a meaningful decline from these levels” in the dollar index, he said.

Poor U.S. housing data on Wednesday added to slowdown concerns, and Fed Chair Jerome Powell had ratcheted up the hawkish rhetoric the previous day by saying the U.S. monetary authority would push interest rates as high as needed to stem a surge in inflation that he said threatened the foundation of the economy.

Powell’s stance “makes it hard to achieve a ‘soft landing’ for the U.S. economy given the long lags between changes in monetary policy and changes in inflation,” Joseph Capurso, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY) in Sydney, wrote in a client note. “The darkening outlook for the U.S. economy supports the USD and safe-haven currencies.”

The euro rebounded 0.38% to $1.0501 after Wednesday’s 0.84% slump.

Sterling got some respite with a 0.37% gain to $1.23905, after dropping 1.2% overnight as a surge in U.K. inflation to a 40-year record fostered worries for a sharp economic slowdown.

Continue Reading

News

Stock Markets12 mins ago

Shares slide as global growth fears mount

© Reuters. FILE PHOTO – An investor sits in front of a board showing stock information at a brokerage office...

World12 mins ago

‘I mean Ukraine’: Former U.S. president George Bush calls Iraq invasion ‘unjustified’

3/3 © Reuters. FILE PHOTO: U.S. President George W. Bush reacts to a question after a man threw a shoe...

Commodities12 mins ago

China lifts curbs on Canadian canola, demand seen muted

© Reuters. FILE PHOTO: Canola seeds ready for shipping off the Sterling Hilton farm are seen near Strathmore, Alberta, Canada,...

Stock Markets42 mins ago

Analysis-Crypto crash leaves El Salvador with no easy exit from worsening crisis

© Reuters. FILE PHOTO – A sign reading “Pay with Bitcoin here” is set in a furniture store in San...

Commodities42 mins ago

Gold Down, Weighed Down by Aggressive Fed

© Reuters. By Gina Lee Investing.com – Gold was down on Thursday morning in Asia, with a steady dollar and...

Stock Markets42 mins ago

Generali posts smaller-than-expected net profit drop after Russia impairments

© Reuters. FILE PHOTO: The emblem of Italy’s insurer Assicurazioni Generali is pictured in Rome, May 13, 2013. REUTERS/Stefano Rellandini...

Economy42 mins ago

Sri Lanka central bank holds rates; reiterates need for political stability

© Reuters. FILE PHOTO: People walk past the main entrance of the Sri Lanka’s Central Bank in Colombo, Sri Lanka...

Coronavirus1 hour ago

Some in Shanghai allowed out to shop; end of COVID lockdown in sight

4/4 © Reuters. Customers wearing face masks use self-checkout counters at a reopened Carrefour supermarket amid the coronavirus disease (COVID-19)...

Cryptocurrency1 hour ago

Analysts assess the aftermath of the Terra (LUNA) collapse | Cointelegraph interview

Analysts assess the aftermath of the Terra (LUNA) collapse | Cointelegraph interview Financial commentator Frances Coppola is convinced that algorithmic...

Stock Markets1 hour ago

Rogue trader, euro zone crisis and war, Socgen’s CEO ends ‘bumpy’ ride at top

2/2 © Reuters. FILE PHOTO: French bank Societe Generale Chief Executive Officer Frederic Oudea attends a news conference to present...

Commodities1 hour ago

Oil Up as Economic Growth Worries Continue

© Reuters. By Gina Lee Investing.com – Oil was up on Thursday morning in Asia, recovering from early losses as...

Economy1 hour ago

Investors jolted as U.S. retailers show inflation hitting consumers

© Reuters. FILE PHOTO: Shoppers are seen wearing masks while shopping at a Walmart store, in North Brunswick, New Jersey,...

Commodities1 hour ago

Oil prices recoup early losses on China hopes, global supply fears

© Reuters. FILE PHOTO: Workers walk as oil pumps are seen in the background in the Uzen oil and gas...

Economic Indicators1 hour ago

Money for Ukraine to top G7 agenda; inflation, food a concern

© Reuters. FILE PHOTO: Service members of pro-Russian troops wait before the expected evacuation of wounded Ukrainian soldiers from the...

Economy1 hour ago

Aussie jumps, safe-haven dollar and yen ease amid Shanghai reopening signs

2/2 © Reuters. FILE PHOTO: U.S. one dollar banknotes are seen in this illustration taken February 8, 2021. REUTERS/Dado Ruvic/Illustration//File...

Economy1 hour ago

Deutsche Bank enters new era as chairman’s rocky decade ends

2/2 © Reuters. FILE PHOTO: Chairman of the board Paul Achleitner delivers his speech during the annual shareholder meeting of...

World1 hour ago

More Ukraine fighters surrender in Mariupol, Russia says

© Reuters. Buses carrying service members of Ukrainian forces who have surrendered after weeks holed up at Azovstal steel works...

Economy2 hours ago

A manual for grief: How to handle loss at work

© Reuters. FILE PHOTO: Buddhist monks from Dieu Ngu Temple in Westminster, California, chant during a candlelight vigil to mark...

Cryptocurrency2 hours ago

Russia will inevitably legalize crypto payments says trade minister

Russia will inevitably legalize crypto payments says trade minister Russia will legalize crypto payments “sooner or later” according to the...

Stock Markets2 hours ago

Citi promotes Asia-based banker Valderrabano as global wealth COO

© Reuters. FILE PHOTO: The Citigroup Inc (Citi) in Toronto, Ontario, Canada October 19, 2017. Picture taken October 19, 2017....

Coronavirus2 hours ago

North Korea weapons threat casts shadow on Biden visit

© Reuters. FILE PHOTO: Hwasong-17 intercontinental ballistic missiles take part in a nighttime military parade to mark the 90th anniversary...

Economy2 hours ago

China’s zero-COVID policy dashes global hopes for quick economic return to normal

© Reuters. FILE PHOTO: A worker in a protective suit walks on a closed bridge during lockdown, amid the coronavirus...

Stock Markets2 hours ago

Analysis-Rare double whammy hits investors: steep slumps for both stocks and bonds

© Reuters. FILE PHOTO: A Wall Street sign outside the New York Stock Exchange in New York City, New York,...

Stock Markets2 hours ago

Woodside shareholders approve BHP petroleum merger

© Reuters. FILE PHOTO: The logo for Woodside Petroleum, Australia’s top independent oil and gas company, adorns a promotional poster...

Forex2 hours ago

Dollar Down, but Investor Sentiment Remains Fragile Over Recession Fears

© Reuters. By Gina Lee Investing.com – The dollar was down on Thursday morning in Asia. Safe-haven currencies pressed paused...

Stock Markets2 hours ago

Singapore Airlines sees no big growth risk from Boeing 777X delays

© Reuters. FILE PHOTO: A woman walks past a Singapore Airlines (SIA) logo at a ticketing booth at Changi airport...

Stock Markets2 hours ago

Guatemalan congress approves $500 million loan from World Bank

© Reuters. GUATEMALA CITY (Reuters) – Guatemala’s congress approved on Wednesday a $500 million loan from the World Bank that...

Cryptocurrency2 hours ago

‘Grim Reapers’ financial crimes unit revived to investigate Terra collapse

‘Grim Reapers’ financial crimes unit revived to investigate Terra collapse Legal troubles are mounting for the co-founder of failed Terra...

Coronavirus2 hours ago

Biden visits Japan, South Korea carrying warning to China

© Reuters. FILE PHOTO: Japan’s Prime Minister Fumio Kishida attends a virtual meeting with the U.S. President Joe Biden at...

Cryptocurrency3 hours ago

$3B flows to Metaverse and Web3 gaming this month as A16z’s tips in $600M

$3B flows to Metaverse and Web3 gaming this month as A16z’s tips in $600M Venture capital firm Andreessen Horowitz (a16z)...

Trending