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Realistbear

B O J: "higher Long-term I R Reflect Bullish Economic Views"

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http://mdn.mainichi-msn.co.jp/business/new...0bu023000c.html

Fukui sees bullish sentiment behind higher interest rates

Higher long-term interest rates reflect bullish economic views
around the world, Bank of Japan Governor Toshihiko Fukui observed Friday.
Global imbalances and higher crude oil prices are fundamental risk factors for the world economy, he said at a press conference after the end of a meeting of senior finance officials of the Group of Seven major economies in the United States.
Higher crude oil prices have a risk of increasing inflation pressure, Fukui said.
Increases in long-term interests in major countries represent a process for normalizing interest rates, he added.

Is the nice Japanese gentleman with the rude name "bullish" from the Bulls point of view? Forewarned is forearmed. :)

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http://framehosting.dowjonesnews.com/sampl...06160005&Take=1

21 Apr 2006 06:16 GMT =DJ BOJ Watch: Rising Interest Rates Put BOJ In Bind

By Hiroshi Inoue

A Dow Jones Newswires Column

TOKYO (Dow Jones)--Recent remarks by top Bank of Japan officials on rising interest rates show the bind the central bank is in: while it's not that worried about interest rate levels in Japan now, it needs to sound concerned to prevent rates from climbing even further.
At the same time, officials feel they might need to keep quiet about another matter: their concern that factors may emerge in the long term that could cause Japan's economy to overheat. Traders would likely interpret such warnings as a signal for a monetary policy tightening, leading them to push up interest rates.
On the surface, comments from senior officials would suggest some concern at the central bank about the rise in long-term rates.
BOJ Governor Toshihiko Fukui weighed in on the issue of rising rates during a trip to Washington, saying Thursday that the central bank must monitor interest rate moves.
"Long-term interest rates seem to be moving in a way that strongly reflects broad economic movement," he said, ahead of a meeting of Group of Seven leading industrial nations' officials. "Still, we must closely follow interest-rate moves because they could have a psychological impact" on the economy.
His remarks followed similar comments by one of his deputies, Toshiro Muto, who said in parliamentary testimony that long-term interest rates appear to be "slightly volatile as of late." Tuesday, the yield on the 10-year Japanese government bond rose to 2%, its highest level since August 1999, and was around 1.895% Friday.
But privately, BOJ officials aren't that concerned with recent interest rate rises, thinking they are a natural reaction to increased economic optimism and higher interest rates abroad. And, in any case, BOJ officials feel they have only limited control over long-term rates because the BOJ's monetary policy targets the overnight rate rather than long-term rates.
Still, the BOJ can't really keep quiet about higher rates as the market could interpret that as a sign it tolerates the rise. The BOJ also needs to respond to government officials, who have been complaining more loudly about the higher rates and who have called on the central bank to do something about them.
Keep Out Talk Of Upside Risks?
One way in which the central bank might respond to rising interest rates is by keeping out of its semiannual economic and outlook report references to so-called upside risks to Japan's economy.
The market will be scouring the report due out April 28 for any clues on the BOJ's monetary policy outlook, and any mention of upside risks, such as possible sharp rises in asset prices in the medium term and beyond, would be seen by market players as a hawkish signal.
"Recent rises in the long-term interest rates will not derail the foundation for a sustainable economic recovery. But they may make it difficult for the BOJ to highlight a stronger economy and mid- and long-term upside risks," says a person close to the BOJ.
Too-hawkish remarks by the BOJ could further fuel market speculation that not only will the central bank end its zero-interest-rate policy in the next few months, it might also raise rates several more times after that during the current fiscal year started in April.
Indeed, short- and medium-term JGB yields have risen to levels that discount as many as three 25-basis-point BOJ rate hikes by March 31, traders say.
Such market moves have led to warnings by government officials.
"Recent long-term rate moves, as the Bank of Japan governor (Toshihiko Fukui) noted, are a bit volatile," Finance Minister Sadakazu Tanigaki said Friday. "A rapid rise in long-term rates is undesirable for the Japanese economy because it is still in mild deflation."
In the face of government officials' remarks like those, BOJ officials are likely to continue to sound worried about interest rate moves, even if they aren't.

Bottom line: Japan has Japan's best interests at heart and are not too concerned about Gordon's Miracle Economy while smiling politely in his direction.

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It looks like the Japanese have learnt the lesson the Irish are about to learn.

Much of their financial hardship was caused by not reigning in a ludicrously over-valued property market.

Banks as usual were too keen to lend money against the market value of these assets, and when the value of property started to fall, the banks found their loans under water.

The solution was to start writing off the loans, but this would have been too painful, so instead they had 15 years of deflation to bring the economy back in balance.

Which still doesn't help the FTB who paid $400k for a 1 bed in 1989 that's now worth $200k.

It's a very sad state of affairs.

And still the Irish can't see what's wrong with their housing boom...

Edited by BandWagon

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It looks like the Japanese have learnt the lesson the Irish are about to learn.

Much of their financial hardship was caused by not reigning in a ludicrously over-valued property market.

Banks as usual were too keen to lend money against the market value of these assets, and when the value of property started to fall, the banks found their loans under water.

The solution was to start writing off the loans, but this would have been too painful, so instead they had 15 years of deflation to bring the economy back in balance.

Which still doesn't help the FTB who paid $400k for a 1 bed in 1989 that's now worth $200k.

It's a very sad state of affairs.

And still the Irish can't see what's wrong with their housing boom...

I agree. We are entering a new era of tighter credit and the party responsible for the cheap money is at last taking the initiative to correct the situation. It amazes me that the Japanese IR moves are not being discussed more in the press. We are already seeing the effects as savings rates start to drop and some Building Societies are raising borrowing rates (Nationwide about a week ago on new loans). The Japanese are giving us a lot of advance warning to take up defensive positions but it seems obvious that the average property owner can do nothing other than to STR and it may already be too late for BTLers to get out given the news this week that yields are already starting to fall, even in London.

The way I see it, we have two prongs in the attack against HPI. IR and oil prices. The combination of these two suggest a much sharper correction than the Great Crash of 1989-96 given the levels of debt, the price to earnings ratios and the deteriorating employment situation.

Edited by Realistbear

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  • 301 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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