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Japan: Only Two I R Hikes Expected This Year

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http://mdn.mainichi-msn.co.jp/business/new...0bu039000c.html

Bank of Japan keeps monetary policy unchanged
Japan's central bank kept monetary policy unchanged Friday at the end of a two-day policy board meeting, deciding to keep interest rates at zero for the time being.
But as Japan's economy recovers, expectations are growing that the Bank of Japan may raise interest rates as early as July.
In March, the bank ended its five-year super easy monetary policy of flooding the financial markets with excess cash to encourage lending, while keeping interest rates virtually at zero.
The bank's policy board members voted unanimously to keep zero interest rates unchanged for the time being _ in line with market expectations. The bank also held steady its monthly Japanese government bond purchases at 1.2 trillion yen (US$10.8 billion; euro8.5 billion).
The bank also kept its assessment of the economy unchanged in a monthly report, saying that the economy continues to recover, but slightly upgraded its outlook for the economy as expected to expand moderately.
Bank of Japan Gov. Toshihiko Fukui, who is scheduled to give a news conference later in the day, has said the zero-rate policy won't end immediately after the bank finishes draining excess funds from the money market, a process still underway.
A growing number of analysts expect the Bank of Japan to raise the key short-term interest rate to 0.25 percent in July with some expecting another hike to 0.5 percent by the end of the year.
The bank resorted to its unusual monetary policy -- unprecedented among major industrialized economies -- to help wrest the economy out of stagnation that lasted for more than a decade.
On Friday, the government said the Japanese economy grew at a healthy 1.9 percent annual pace in the first quarter on the back of strong exports, improved consumer spending and healthy corporate investment.
The world's second largest economy has expanded now for five quarters straight, as well as for four fiscal years straight. The Japanese economy grew a solid 3.0 percent over the fiscal year ended March 31, the Cabinet Office said.
Such signs that the revival is on firm footing is likely to work as a reassurance to the central bank as it weighs various factors to decide when to give the go-ahead on raising interest rates.
Another special problem that Japan has been fighting is deflation, which deadens economic activity by pushing down prices, wages and production in a downward spiral. Recent data has provided a mixed picture: Consumer prices are rising, but other indicators show mild deflation, although such pressures seem to be gradually easing.
But by declaring the end of its zero interest rate policy in March, the Bank of Japan signaled that it considered deflation was no longer a problem. (AP)
May 19, 2006

Given the substantial amount of credit that the UK and other nations have used to fuel cheap mortages for the past several years a change is about to happen and it may well be the trigger for an accelration in the HPC process. With debt levels at all time records in the UK a couple of hikes from Japan will trickle down to consumers in the form of loans much higher than the origination rate of .25%.

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BBC pick up story but avoid any mention of IR consequences elsewhere:

http://news.bbc.co.uk/1/hi/business/4996602.stm

Last Updated: Friday, 19 May 2006, 08:16 GMT 09:16 UK

Japan sees economic growth boost

This is Japan's second-longest post-war growth period

Japan's economy grew faster than expected in the first quarter of 2006 - prompting speculation that zero interest rates may soon end.
Official data from the Bank of Japan showed that the country's economy grew by an annualised rate of 1.9% -
nearly double what analysts had expected
.

TTRTRates soon. :o

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http://mdn.mainichi-msn.co.jp/business/new...0bu039000c.html

Bank of Japan keeps monetary policy unchanged, May 19, 2006
...The bank resorted to its unusual monetary policy -- unprecedented among major industrialized economies -- to help wrest the economy out of stagnation that lasted for more than a decade...
...Another special problem that Japan has been fighting is deflation, which deadens economic activity by pushing down prices, wages and production in a downward spiral. Recent data has provided a mixed picture: Consumer prices are rising, but other indicators show mild deflation, although such pressures seem to be gradually easing...
Hard not to think that the BoJ's policy has been a disaster for the rest of the world. Assuming central banks and economists do reflect and learn, how will other big countries respond to deflationary pressures? If demographics, declining fossil fuel output and failure to bring new technologies that drive productivity to market (think Microsoft, nuclear fusion), how will govts and central banks respond in future? and if we go into a recession with high levels of bad debts? Some tricky questions here.

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  • 302 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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