Bo J Announced They Are Now Ready To Begin I R Hikes

[Realistbear]

http://www.finfacts.com/irelandbusinessnew..._10006272.shtml

The Bank of Japan Governor Toshihiko Fukui said today that

Japan needs to adjust interest rates from near zero without delay if the economy and prices follow the path the bank predicted.

``We are entering a tough phase in which we need to implement policy steps without delay, little by little,'' the central bank head said in a speech at the National Press Club in Tokyo today. Japan's real interest rates are at ``extremely low'' levels and could risk causing aggressive investment by companies and stimulating growth excessively, he said.

Bring it on........................

FX reacts immediatley to the IR hiking news:

http://www.fxstreet.com/nou/content/110510...sis&dia=2062006

Yen is pushed higher today by hawkish comments from BoJ Governor Fukui. Speaking at the national PRess Club in Tokyo on monetary policy, Fukui noted that keeping interest rates low for too long risks larger economic swings and decisiveness was required of the central bank for rate hike. Though rate hike should be made in small increments as said by Fukui. Regarding recent stock market fluctuations, Fukui said that recent moves were reasonable adjustments and and had no impact on the real economy. USD/JPY was immediately low on such news and is challenging 115.00 level.

Edited June 20, 2006 by Realistbear

[jp1]

This is the important news of the month/year, not all the crap on BBC about 'returning' FTBers / 'bumper' mortgage lending etc

All the recent chaos in markets results from BoJ end of quantative easing. This is the start of phase2

It seems clear now that people will carry on borrowing money and buying ever more expensive property ad infintum here in Browns Little Britain - clearly a ponzi-scheme madness has taken over.

I think theres only one thingto stop this, thats hard cash - ie higher IRs.

IMO all this is playing out now, and the real question, not do we/dont we have inflation etc, but will Bernake and BoE 'blink' 1st when faced with the choice of inflation or recession and HPC. I reckon this will play out September/October when IRs get tighter and the "dont throw us into recession/HPC" whinging starts big-time.

Im still not sure what Merv et all will do [with Brown providing the CPI figures and the inflation target - dont be surprised to see target moved 'temporarily' by Brown to 3% - "to bring UK in line with global inflation and energy costs"]

Were happy renting at moment, but if BoE 'blinks' and either dont raise rates/cut them by the autumn, we plan to flip a few houses in the resultant 'mini-boom 2' to build up our deposit, as its clear 'affordability' these days means nothing, and fundamentals are irrelevant.

I wouldnt though buy a place to live in longer term, as Im still convinced this will go t*its-up on an even bigger scale if it isnt sorted out soon

[jonathan trees]

More clutching at straws by the doom-mongers who take the slightest bit of negative news, no matter how trivial, to argue for a property crash.

Talk about the Bank of Japan threatening to raise interest rates has absolutely no relevance whatsoever to the UK housing market.

It just goes to show the desperation of the doom-mongers who have clearly lost the battle and cannot come to terms with the fact that they have lost and the property bulls have won.

[DTMark]

I was wondering this. In the event that the BOE raise, or look to raise IRs, then surely Brown will indeed simply raise the inflation target to 3% and/or fiddle the CPI basket again.

For a moment, assume that rates stay on hold, or come down over the next year (this isn't what I imagine will happen, but it's a possibility), and that the cost of living carries on rising by say 8% per year while at the same time inflation stays below 3%.

This might sound naiive, but why wouldn't Brown do that, what would be the consequence? I'm just wondering how much mileage is left with the inflation con and what would force its end?

[Warwickshire Lad]

It just goes to show the desperation of the doom-mongers who have clearly lost the battle and cannot come to terms with the fact that they have lost and the property bulls have won.

Property is not a bull market anymore, neither is it a bear market.

But it is on very thin ice.

[marko]

Talk about the Bank of Japan threatening to raise interest rates has absolutely no relevance whatsoever to the UK housing market.

Seeing as you are able to string a sentence together, I am assuming you are just trying to wind people up with this ridiculous statement, rather than actually believe it.

If you do however believe your own rubbish, then GOD HELP YOU.

[Jimmy James]

I was wondering this. In the event that the BOE raise, or look to raise IRs, then surely Brown will indeed simply raise the inflation target to 3% and/or fiddle the CPI basket again.

For a moment, assume that rates stay on hold, or come down over the next year (this isn't what I imagine will happen, but it's a possibility), and that the cost of living carries on rising by say 8% per year while at the same time inflation stays below 3%.

This might sound naiive, but why wouldn't Brown do that, what would be the consequence? I'm just wondering how much mileage is left with the inflation con and what would force its end?

There is no reason why Brown can't adjust the inflation target for the BOE.

However doing so would give an important signal to the markets that the UK was 'wobbly' on inflation, leading to pressure on sterling. The downwards movement on sterling wouldn't be welcomed by the BoE, and it would also lead to increasing inflationary pressure exported into the UK economy. If Brown was forced to 'readjust' the inflation target it would also be at a time at which the economy and sterling were both looking shaky - thus making doing so even more likely to cause a run on the pound.

Every Labour chancellor has ended with a crisis in confidence on the pound, although all previous chancellors have managed to achieve this in just one term, rather than the current three. I would be very ironic if Brown ended his tenure with the same crisis, despite all his attempts to ensure this didn't happen (the chief reason for granting the BoE independence).

But you're right - any bumping of the inflation target up against a more general perceived 'need' for lower interest rates to boost the UK economy is likely to create a hell of a lot of political friction, from all sides. I personally think George Osbourne is just as likely to put populism before inflation and the BoE - witness his punting the idea of more 'appointed' members of the MPC. Unfortunately the institutional preservation of inflation targetting may not seem such a great idea to joe public as it has for the past 10 years when it leads to tough decisions.

[Control Freak]

I Tried to start a post on these kind of Global events starting to take a toll on House Prices Here, but it never made it past the starting blocks (well, the moderators :angry: :angry: :angry: ). WTF is going on?

Anyway:

1. If the Japanese raise interest rates this will have a knock on effect on ours (no more cheap credit)

2. If the US economy tanks, then our chances of avoiding a recession (and with it a fall in House prices (as well as just about everything else)) will be severely affected

What other Global events are there that could stir things up? Bird Flu??

It seems that an external trigger is what is required. I have waited for just the weight of the market to fall just by its own sheer weight, but this does not seem to be happening. It is like watching a guy spinning a hundred plates all at once - you cannot believe that he is managing it, yet he adds more to spin!!

I suppose this post will get modded/deleted seeing as I have used the Heinous "Global" word.

Ah well, I fart in the mods general direction if they do. (apologies if they don't)

CF

[jp1]

I Tried to start a post on these kind of Global events starting to take a toll on House Prices Here, but it never made it past the starting blocks (well, the moderators :angry: :angry: :angry: ). WTF is going on?

You could discuss it onGl0balMousepriceCrash.com [sic - if you get what I mean]

[Control Freak]

You could discuss it onGl0balMousepriceCrash.com [sic - if you get what I mean]

I see what you are getting at, but I was not not making any references to the 'Other Place', just making a comment about global events maybe having more impact than UK events.

The level of moderation is getting a bit silly.

PS. Why am I still classed as a new member, when I have over 200 posts and have been a member for nearly 2 years?

Edited June 20, 2006 by Control Freak

[music man]

Of couse money / trade is a global issue. Money is just a bartering tool that happens to be globally controlled.

By a few people of course.

[brainclamp]

You can look at these global themes, but in reality if Japan is printing to much money, the yen will tend to fall against other currencies, negating the effects, punishing the holders of yen, until they get keen to dump them.

Of course, unexpected events can have some effect - the default of Russia on its bonds, for example had ripple effects.

In 2001 Japan implemented its 'easing' stratergy - its savers, Yen savers have been seeking any currency other than thier own. This has caused a surge in liquidity.

But there are many reaons why such a surge is not yet over from Japan....

http://business.timesonline.co.uk/article/...2221438,00.html

So I wouldn't place any real bite on Japan raising interest rates as being a reason why HPI would dimish!

What I find interesting is why the yen hasn't plunged in value.

[jp1]

You can look at these global themes, but in reality if Japan is printing to much money, the yen will tend to fall against other currencies, negating the effects, punishing the holders of yen, until they get keen to dump them.

Of course, unexpected events can have some effect - the default of Russia on its bonds, for example had ripple effects.

In 2001 Japan implemented its 'easing' stratergy - its savers, Yen savers have been seeking any currency other than thier own. This has caused a surge in liquidity.

But there are many reaons why such a surge is not yet over from Japan....

http://business.timesonline.co.uk/article/...2221438,00.html

So I wouldn't place any real bite on Japan raising interest rates as being a reason why HPI would dimish!

What I find interesting is why the yen hasn't plunged in value.

Hang on a minute - did you not notice? - that report was 'written' by Mickey Mouse Anatole Kaletsky

[Charlie Don't Surf]

Slight aside, but can anybody explain why the pound id still so strong considering every other country is hiking interest rates and everybody with half a brain realises the fundamentals for a healthy economy are diminishing at an alarming rate?

[Jason]

There is no reason why Brown can't adjust the inflation target for the BOE.

However doing so would give an important signal to the markets that the UK was 'wobbly' on inflation, leading to pressure on sterling. The downwards movement on sterling wouldn't be welcomed by the BoE, and it would also lead to increasing inflationary pressure exported into the UK economy. If Brown was forced to 'readjust' the inflation target it would also be at a time at which the economy and sterling were both looking shaky - thus making doing so even more likely to cause a run on the pound.

Every Labour chancellor has ended with a crisis in confidence on the pound, although all previous chancellors have managed to achieve this in just one term, rather than the current three. I would be very ironic if Brown ended his tenure with the same crisis, despite all his attempts to ensure this didn't happen (the chief reason for granting the BoE independence).

But you're right - any bumping of the inflation target up against a more general perceived 'need' for lower interest rates to boost the UK economy is likely to create a hell of a lot of political friction, from all sides. I personally think George Osbourne is just as likely to put populism before inflation and the BoE - witness his punting the idea of more 'appointed' members of the MPC. Unfortunately the institutional preservation of inflation targetting may not seem such a great idea to joe public as it has for the past 10 years when it leads to tough decisions.

I have thought about how the inflation target could be changed. But I think it would be the end of Brown if he did. Remember he moved it to be inline with the EU, so I don't he would try to change it.

[Realistbear]

Slight aside, but can anybody explain why the pound id still so strong considering every other country is hiking interest rates and everybody with half a brain realises the fundamentals for a healthy economy are diminishing at an alarming rate?

Its a mystery to me.

I think there is a perception out there that Gordon has it all under control despite this morning's awful figures on government overspending. High house prices and high levels of spending have convinced the world that we are a wealthy country despite a private debt level very near or in excess of that in the US per capita. The newspapers only print the good news and Land Registry data of falling prices are kept hidden or on HPC-type blogs where the "nuts" hang out. There is no end to the Miracle Economy and Gordon's smiling face has them all mesmerized that it is going to continue into his term of ofice as the Prime Minister.

When Gordon and his Miracle are finally rumbled I would expect sterling to drop back to its historic average of around 1.60 or so (the average rate of the last decade give or take a few cents).

Gordon cannot raise rates without destroying HPI and with HPI gone nothing much remains. The question is whether he dare raise the rates and risk his brainchild--endless fiscal stimulation to pay for his endless spending without inflation. He can cover up true inflation in the short term but truth will out him sooner rather than later. Of course, he will try to cover the whole mess up by moving the goal posts again to say that 3% CPI is normal and the new target given the new paradigm in world inflation.

He's a canny Scot to be sure. Or, in the words of someone further south: a cunning bugger.

[Realistbear]

http://uk.biz.yahoo.com//20062006/323/doll...ins-ground.html

Tuesday June 20, 07:28 PM

Dollar edges up against euro, yen gains ground

LONDON (AFP) - The dollar edged up against the euro but lost ground against the yen after the Bank of Japan (BoJ) effectively gave the green light to a summer interest rate hike, dealers said.

BoJ have given the green light to the start of IR hikes. As they are the HPI's creditor there is going to be hell to pay once this has unwound. A small hike in Japan does not equal a small hike in the lap of the debtor as there are many intermediaries all eager for a piece of the IR action. That which has underpinned HPI--accomodative IR from Japan--is about to end.

[RichB]

Fukui by name...

[bring_it_on]

Fukui by name...

LOL I never noticed that one!

[Realistbear]

The BoJ boss may be Fukui'd up?

IR may not rise now:

http://mdn.mainichi-msn.co.jp/business/new...0bu037000c.html

Rate hike amid deflation to hurt Japan economy: Tanigaki

Japan's economy will be negatively affected if interest rates rise one-sidedly while the country has yet to eliminate deflation, Minister of Finance Sadakazu Tanigaki said Wednesday.

Commenting on the Bank of Japan's zero interest rate policy in a speech, Tanigaki also said interest rates need to be normalized in accordance with the progress of Japan's economic recovery. (Jiji Press)

June 21, 2006

Same old game, will they/won't they?

[Charlie Don't Surf]

They may well do what America tells them to with N Korea testin ICBMs in their back yard!