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Japan Eases Monetary Policy To Combat Yen’S Rise

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http://www.nytimes.com/2010/08/30/business/global/30yen.html?ref=business

Japan’s central bank announced new measures to combat a faltering economy and rising yen on Monday, but held off from bolder steps, while the government said it would unveil a fresh stimulus plan.

Separately, Prime Minister Naoto Kan suggested that the government would outline a new stimulus plan later in the day to shore up the country’s economy. Analysts expected the scale of any new spending to be modest, constrained by already colossal levels of Japan’s public debt.

Anticipation of the moves sent Japan’s Nikkei index rising more than 3 percent, but after the monetary easing was announced, stocks started surrendering some of those gains, with the index up less than 2 percent by midday.

The global economic crisis led export-reliant Japan to its worst recession in decades, and the country’s recovery since then has looked increasingly shaky. Figures released this month showed that Japan’s economy grew just 0.1 percent in the April-June quarter.

A jump in the value of the yen to 15-year highs has hampered the country’s exporters, who are responsible for much of Japan’s economic growth, by making their products less competitive.

After an emergency meeting, the Bank of Japan announced that it would expand the volume of money available to banks under a special fixed rate to 30 trillion yen ($351 billion) from 20 trillion yen. It also introduced a six-month loan facility on top of a three-month program already in place. The bank’s board voted to leave its main overnight target rate at 0.1 percent.

While the markets were skeptical that the steps would be enough, they have raised investor hopes that the government will be more aggressive. Years of economic stagnation in Japan have sapped demand for fresh loans from companies and consumers, despite rock-bottom interest rates.

Apart from easing the yen’s rise, these measures are intended to help Japan’s economy by increasing the supply of money in the financial system and encouraging banks to boost lending.

Some analysts expect the bank to ease monetary policy even further.

“In our view, this will not be the last easing. If the economic outlook and market conditions get worse, the BOJ will likely announce some additional easing measures,” Masaaki Kanno, economist at JPMorgan Securities Japan, said in a note to clients Monday morning.

The Japanese have been doing this for 20 years now and it's still not worked. If only they had increased it by more I'm sure this it would have worked.

Although perhaps trying a different tack and forcing bankruptcy on the failed might produce better results after the short term pain. However that might force some people to suffer a loss of face which clearly the Japanese don't want to happen so carry on as before at some it will work right?

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http://www.nytimes.com/2010/08/30/business/global/30yen.html?ref=business

The Japanese have been doing this for 20 years now and it's still not worked. If only they had increased it by more I'm sure this it would have worked.

Although perhaps trying a different tack and forcing bankruptcy on the failed might produce better results after the short term pain. However that might force some people to suffer a loss of face which clearly the Japanese don't want to happen so carry on as before at some it will work right?

You'd have thought that the Yen would have been knocked back a tad this morning on this news but in fact it's up a fraction.

Maybe this opens the way for a bit of QE here in the UK? What harm would it do?

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http://www.nytimes.com/2010/08/30/business/global/30yen.html?ref=business

Although perhaps trying a different tack and forcing bankruptcy on the failed might produce better results after the short term pain. However that might force some people to suffer a loss of face which clearly the Japanese don't want to happen so carry on as before at some it will work right?

Tell that to Mr King at BoE too. Looks like BoE too prefers a long term shallow (and gradually becoming deeper) pain rather than a short term deep pain.

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http://www.telegraph.co.uk/finance/markets/7972437/Asian-stocks-retreat-as-Nikkei-drops-3.5pc.html

Japan's Nikkei 225 stock average led regional declines, down 325 points, or 3.5pc, to 8,824 - its lowest close since April 2009.

Dragging on sentiment was the yen's advance, which erodes the earnings of Japan's vital exporters, and disappointment over the central bank's decision to ease monetary policy by expanding a low-interest low programme. Markets had been hoping for stronger action.

Just found this in the Telegraph.

They should have gone with the tried and tested printing more money, it has worked so well in the past.

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  • 245 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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