BOJ's success may hinge on fate of 'kamikaze' Trump rally
Japan Times -- Dec 27
The Bank of Japan, which has given up on achieving its 2 percent inflation goal by printing more money, is expected to fret over the fate of the "Trump rally" in 2017.

If U.S. Treasury yields continue to rise and the dollar extends gains against the yen, the BOJ might begin tapering its aggressive monetary easing. But once the yen turns upward, the central bank could be forced to implement additional easing once again, just like it’s done for the past several years.

“The BOJ wants to carefully assess sustainability of the rise in U.S. interest rates and the yen’s weakening trend since the U.S. presidential election,” said Naohiko Baba, chief economist at Goldman Sachs Japan Co.

2016 was turbulent for the BOJ. The central bank decided in January to apply a negative interest rate of 0.1 percent on some reserves held by commercial banks. In September, the bank shifted its policy target to “yield curve control” instead of boosting asset purchases.

At its two-day policy meeting through Dec. 20, the first since the U.S. election, the BOJ kept its 10-year government debt yield target unchanged at around zero percent, as well as its negative interest rate policy.

BOJ Gov. Haruhiko Kuroda denied the possibility of raising the yield target anytime soon, despite the continued rise of long-term interest rates after Republican Donald Trump’s victory.

“Promoting powerful monetary easing under the current policy is most appropriate” for now to realize 2 percent inflation, Kuroda said at a news conference after the meeting.

Should the BOJ successfully curb increases in government bond yields, the wider interest rate gap between Japan and the United States would weaken the yen further against the dollar, as the Federal Reserve is set to continue tightening monetary policy in line with economic recovery.

Expectations for Trump’s economic policies, centering on infrastructure spending and tax cuts, may also pump up stock prices, slashing demand for U.S. Treasuries and sending yields higher. Debt prices move inversely to yields.

A falling yen would push up import prices in Japan, which could help the BOJ attain its inflation goal, although core consumer prices, excluding volatile fresh food prices, were mostly stuck in negative territory during 2016.

News source: Japan Times
Feb 23
Japan's Crown Prince Naruhito turned 58 on Friday. (NHK)
Feb 23
A World Trade Organization panel has ruled in Japan's favor in a dispute over South Korea's ban on seafood imports from 8 Japanese prefectures. (NHK)
Feb 23
Aomori Prefectural Police have arrested an 18-year-old girl for allegedly killing her 2-year-old son at a residence in Mutsu City on Tuesday, reports the Yomiuri Shimbun (tokyoreporter.com)
Feb 23
A senior Japanese official has criticized South Korea for what he calls the illegal occupation of the Takeshima Islands in the Sea of Japan. He made the remark on Thursday at a ceremony to commemorate Japan's incorporation of the islands more than a century ago. (NHK)
Feb 23
Tokyo Metropolitan Police have arrested a 21-year-old Korean national for the alleged possession of marijuana after a pursuit ended in an accident in Shibuya Ward early Wednesday, reports TV Asahi. (tokyoreporter.com)
Feb 23
Prosecutors have announced the non-prosecution of a male socialite over the alleged threats of a partner in a sex business last year, reports TV Asahi (tokyoreporter.com)
Feb 23
The health, labor and welfare division of Japan's ruling Liberal Democratic Party on Thursday broadly approved a diluted draft bill for strengthening measures against passive smoking in public places, including restaurants. (Jiji)
Feb 23
Japan's Self-Defense Force has begun surveying a lake in the northern prefecture of Aomori where a US fighter jet offloaded 2 external fuel tanks. (NHK)
Feb 23
Japanese automaker Honda has announced that its HondaJet won the most delivered jet title in its category last year. (NHK)
Feb 23
Osaka Prefectural Police have raided four so-called 'girl's bar' establishments in Osaka for licensing violations that are believed to have employed minors, reports TV Asahi. (tokyoreporter.com)