Latest news with #BankOfJapan
Reuters
a day ago
- Business
- Reuters
BOJ warns of risks to economy, says rate-hike path on course
KOCHI, Japan, July 23 (Reuters) - Bank of Japan Deputy Governor Shinichi Uchida said risks to economic activity and prices were skewed to the downside due to "extremely high" uncertainty over trade policy, even as he reiterated the central bank's readiness to proceed with further interest rate hikes. Uchida's remarks came hours after U.S. President Donald Trump announced a trade deal with Tokyo, a move that will likely ease some concerns over Japan's economic outlook. "Uncertainties surrounding each country's trade policy, and the effect on domestic and overseas economies, remain extremely high. As such, risks to economic activity and prices are skewed to the downside," Uchida said on Wednesday in a speech to business leaders in Kochi, southwestern Japan. "The BOJ needs to adjust monetary policy to best balance upside and downside risks from the perspective of maintaining economic and price stability," he added. The remarks from Uchida, who is known to deliver strong hints on the policy outlook, come ahead of the BOJ's July 30-31 rate-setting meeting when the board will issue a quarterly report with new growth and inflation projections. Sources have told Reuters the BOJ's report will warn of uncertainty over the impact of U.S. tariffs, but may offer a less gloomy view on the near-term hit to Japan's economy than three months ago when market volatility was at its peak. If some progress is made in Trump's trade negotiations with other countries, Japanese companies will likely enjoy strong profits and continue hiking wages, Uchida said. "But if the negative impact of tariff policies turns out to be greater or more prolonged than expected, the wage-hike trend seen in the past few years could weaken," he said. While warning of risks to economic growth, Uchida said inflation was running hotter than initially expected as rises in food costs were spreading beyond the price of rice. "This suggests that, at least with regards to food prices, firms' price-setting behaviour has changed significantly compared to the past," Uchida said, adding that rising food costs may have a relatively strong influence on households' inflation expectations. The BOJ expects underlying inflation, or price rises driven by strength in domestic demand, to reach its 2% target around the latter half of fiscal 2026 through 2027, he said. While media reports that Prime Minister Shigeru Ishiba may step down could add to political uncertainty, receding worries about a U.S.-Japan trade deal led some analysts to predict the chance of another rate hike by the end of this year. "The trade deal with the U.S. announced today removes a key downside risk to Japan's economy," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. "And while the potential resignation of Ishiba creates political risks, our conviction that the Bank of Japan will resume its tightening cycle before the end of the year has risen," Thieliant said. The BOJ exited a decade-long, radical stimulus programme last year and raised short-term interest rates to 0.5% in January on the view that Japan was on the cusp of sustainably hitting its 2% inflation target. While the central bank has signalled its readiness to raise rates further, concerns about the economic fallout from higher U.S. tariffs forced it to cut its growth forecasts in May and complicated decisions around the timing of the next rate increase. Key to the BOJ's rate-hike timing would be whether firms will continue to hike wages next year despite U.S. tariffs, and help underpin economic growth, analysts say. A Reuters poll showed a majority of economists expect the BOJ to raise its key interest rate again by year-end, though most expect the bank to stand pat at this month's meeting.
Bloomberg
3 days ago
- Business
- Bloomberg
Carmignac's Marie-Anne Allier on the Bank of Japan
Carmignac's Fixed-Income Fund Manager Marie-Anne Allier on the muted market reaction to the Japanese election and what's next for the Bank of Japan. Allier speaks with Bloomberg's Guy Johnson and Lizzy Burden on 'The Opening Trade'. (Source: Bloomberg)
Reuters
3 days ago
- Business
- Reuters
Asia stocks, yen look past Japan politics as earnings loom
SYDNEY, July 21 (Reuters) - Asian shares and the yen held their ground on Monday as Japanese elections proved bad for the government but no worse than already priced in, while Wall Street futures braced for earnings from the first of the tech giants. Investors were also hoping for some progress in trade talks ahead of President Donald Trump's August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union. There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest. European Commission President Ursula von der Leyen has stolen a march and will meet with Xi on Thursday. In Japan, the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms. Ishiba vowed to stay in the position, which along with a market holiday, limited the reaction and the yen was 0.4% firmer at 148.29 to the dollar. "The loss was within the range of expectations, and actually the outlook was even more pessimistic," said Nissay Research Institute chief economist Tsuyoshi Ueno. "In terms of negotiations with the U.S., it is easy to doubt whether a government with such a weak foundation is reliable as a negotiating partner," he added. "For the Bank of Japan, if there is political instability, it will be difficult to raise interest rates, and pressure on the yen will continue." The BOJ still has a bias to raise rates further but markets imply little chance of a move until late October. While the Nikkei (.N225), opens new tab was shut, futures traded at 39,885 and up on the cash close of 39,819. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab eased 0.1%, while South Korean stocks (.kS11), opens new tab added 0.5%. Chinese blue chips (.CSI300), opens new tab firmed 0.3%, led by rare earth and construction sectors, as Beijing kept interest rates unchanged as widely expected. EUROSTOXX 50 futures and DAX futures both dipped 0.3%, while FTSE futures were flat. S&P 500 futures and Nasdaq futures both edged up 0.2%, and are already around record highs in anticipation of more solid earnings reports. A host of companies reporting this week include Alphabet (GOOGL.O), opens new tab and Tesla (TSLA.O), opens new tab, along with IBM (IBM.N), opens new tab. Investors also expect upbeat news for defence groups RTX (RTX.N), opens new tab, Lockheed Martin (LMT.N), opens new tab and General Dynamics (GD.N), opens new tab. Ramped up government spending across the globe has seen the S&P 500 aerospace and defence sector rise 30% this year. Tech giant Microsoft (MSFT.O), opens new tab issued an alert about "active attacks" on server software used by government agencies and businesses, urging customers to download security updates. In bond markets, U.S. Treasury futures held steady having dipped late last week after Federal Reserve Governor Christopher Waller repeated his call for a rate cut this month. Most of his colleagues, including Chair Jerome Powell, have argued a pause is warranted to judge the true inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61%, rising to 80% for October. Powell's reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge. The European Central Bank meets this week and is expected to hold its rates steady at 2.0% following a string of cuts. "The press conference will likely keep highlighting uncertainty and need to wait for tariff negotiations to conclude before deciding the next step," said analysts at TD Securities in a note. "Similarly, its 'meeting-by-meeting' language would be retained in the release." The euro was unchanged at $1.1630 in early trading, having dipped 0.5% last week and away from its recent near-four-year top of $1.1830. The dollar index was a fraction lower at 98.373 . In commodity markets, gold firmed 0.5% to $3,367 an ounce with all the recent action in platinum which last week hit its highest since August 2014. Oil prices were caught between the prospect of increased supply from OPEC+ and the risk European Union sanctions against Russia for its war in Ukraine could curb its exports. Brent edged up 0.1% to $69.38 a barrel, while U.S. crude added 0.2% to $67.50 per barrel.
CNA
3 days ago
- Business
- CNA
Asia stocks, yen look past Japan politics as earnings loom
SYDNEY :Asian shares and the yen held their ground on Monday as Japanese elections proved bad for the government but no worse than already priced in, while Wall Street futures braced for earnings from the first of the tech giants. Investors were also hoping for some progress in trade talks ahead of President Donald Trump's August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union. There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest. European Commission President Ursula von der Leyen has stolen a march and will meet with Xi on Thursday. In Japan, the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms. Ishiba vowed to stay in the position, which along with a market holiday, limited the reaction and the yen was 0.4 per cent firmer at 148.29 to the dollar. "The loss was within the range of expectations, and actually the outlook was even more pessimistic," said Nissay Research Institute chief economist Tsuyoshi Ueno. "In terms of negotiations with the U.S., it is easy to doubt whether a government with such a weak foundation is reliable as a negotiating partner," he added. "For the Bank of Japan, if there is political instability, it will be difficult to raise interest rates, and pressure on the yen will continue." The BOJ still has a bias to raise rates further but markets imply little chance of a move until late October. While the Nikkei was shut, futures traded at 39,885 and up on the cash close of 39,819. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1 per cent, while South Korean stocks added 0.5 per cent. Chinese blue chips firmed 0.3 per cent, led by rare earth and construction sectors, as Beijing kept interest rates unchanged as widely expected. MEGA CAPS KICK OFF EUROSTOXX 50 futures and DAX futures both dipped 0.3 per cent, while FTSE futures were flat. S&P 500 futures and Nasdaq futures both edged up 0.2 per cent, and are already around record highs in anticipation of more solid earnings reports. A host of companies reporting this week include Alphabet and Tesla, along with IBM. Investors also expect upbeat news for defence groups RTX, Lockheed Martin and General Dynamics. Ramped up government spending across the globe has seen the S&P 500 aerospace and defence sector rise 30 per cent this year. Tech giant Microsoft issued an alert about "active attacks" on server software used by government agencies and businesses, urging customers to download security updates. In bond markets, U.S. Treasury futures held steady having dipped late last week after Federal Reserve Governor Christopher Waller repeated his call for a rate cut this month. Most of his colleagues, including Chair Jerome Powell, have argued a pause is warranted to judge the true inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61 per cent, rising to 80 per cent for October. Powell's reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge. The European Central Bank meets this week and is expected to hold its rates steady at 2.0 per cent following a string of cuts. "The press conference will likely keep highlighting uncertainty and need to wait for tariff negotiations to conclude before deciding the next step," said analysts at TD Securities in a note. "Similarly, its 'meeting-by-meeting' language would be retained in the release." The euro was unchanged at $1.1630 in early trading, having dipped 0.5 per cent last week and away from its recent near-four-year top of $1.1830. The dollar index was a fraction lower at 98.373. In commodity markets, gold firmed 0.5 per cent to $3,367 an ounce with all the recent action in platinum which last week hit its highest since August 2014. Oil prices were caught between the prospect of increased supply from OPEC+ and the risk European Union sanctions against Russia for its war in Ukraine could curb its exports. Brent edged up 0.1 per cent to $69.38 a barrel, while U.S. crude added 0.2 per cent to $67.50 per barrel. (Editing by Sam Holmes and Shri Navaratnam)
Zawya
3 days ago
- Business
- Zawya
Asia shares, yen look past Japan politics as earnings loom
SYDNEY: Asian shares and the yen held their ground on Monday as Japanese elections proved bad for the government but no worse than already priced in, while Wall Street futures braced for earnings from the first of the tech giants. Investors were also hoping for some progress in trade talks ahead of President Donald Trump's August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the European Union. There were reports Trump and Chinese leader Xi Jinping were closer to arranging a meeting, though likely not until October at the earliest. European Commission President Ursula von der Leyen has stolen a march and will meet with Xi on Thursday. In Japan, the ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power as a tariff deadline looms. Ishiba expressed his intention to stay in the position, which along with a market holiday, limited the reaction and the yen was 0.4% firmer at 148.29 to the dollar. "Ishiba will try to govern with support from some within the opposition, but this likely means a looser fiscal policy and is not good news for bond yields," said Rodrigo Catril, a senior FX strategist at NAB. "History also suggests that domestic political uncertainty tends to keep the BOJ on the sidelines, so the prospect of rate hikes is now set to be delayed for a little bit longer." The Bank of Japan still has a bias to raise rates further but markets are pricing little chance of a move until the end of October. While the Nikkei was shut, futures traded at 39,820 and in line with the cash close of 39,819. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.1%, while South Korean stocks added 0.5%. Chinese blue chips firmed 0.3% as Beijing kept interest rates unchanged as widely expected. MEGA CAPS KICK OFF EUROSTOXX 50 futures and DAX futures both dipped 0.3%, while FTSE futures lost 0.1%. S&P 500 futures and Nasdaq futures both edged up 0.1%, and are already around record highs in anticipation of more solid earnings reports. A host of companies reporting this week include Alphabet and Tesla, along with IBM. Investors also expect upbeat news for defence groups RTX , Lockheed Martin and General Dynamics. Ramped up government spending across the globe has seen the S&P 500 aerospace and defence sector rise 30% this year. In bond markets, U.S. Treasury futures held steady having dipped late last week after Federal Reserve Governor Christopher Waller repeated his call for a rate cut this month. Most of his colleagues, including Chair Jerome Powell, have argued a pause is warranted to judge the true inflationary impact of tariffs and markets imply almost no chance of a move in July. A September cut is put at 61%, rising to 80% for October. Powell's reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge. The European Central Bank meets this week and is expected to hold its rates steady at 2.0% following a string of cuts. "The press conference will likely keep highlighting uncertainty and need to wait for tariff negotiations to conclude before deciding the next step," said analysts at TD Securities in a note. "Similarly, its 'meeting-by-meeting' language would be retained in the release." The euro was unchanged at $1.1622 in early trading, having dipped 0.5% last week and away from its recent near-four-year top of $1.1830. The dollar index was a fraction firmer at 98.465. In commodity markets, gold was little changed at $3,348 an ounce with all the recent action in platinum which last week hit its highest since August 2014. Oil prices were caught between the prospect of increased supply from OPEC+ and the risk European Union sanctions against Russia for its war in Ukraine could curb its exports. Brent edged up 0.1% to $69.36 a barrel, while U.S. crude added 0.2% to $67.45 per barrel.
