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BBC: Japan Rate Rise Imminent

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Japanese rate rise looks imminent

Prices in Japanese shops are creeping up
Falling unemployment and rising prices in the shops have pointed to an imminent end to Japan's long-held policy of zero interest rates.
The jobless rate fell to 4%, or 2.77 million, in May from 4.1% in February and is now at an eight-year low.
May's core consumer price index met market expectations with an 0.6% increase on the same period last year, its seventh consecutive monthly rise.
Analysts think the Bank of Japan could now raise interest rates next month.
The bank's next rate-setting meeting starts on 13 July.

Gordon and Fukui have something in common--they will do anything to avoid the inevitable hiking frenzy that the world's other bankers all see as the necessary path to curb inflation. Now that the Fed's anaemic hike has triggered even more inflation by way of soaring commodity prices much higher hikes may be required.

IMO Fukui is going to be spending more time with his family very soon. In the old days he would be spending some time with his ancestors right now.

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Japan price and jobs data bolster case for a rate rise


Published: June 30, 2006

TOKYO Core consumer prices in Japan rose firmly in May, official data showed Friday, while the jobless rate fell to an eight-year low, reinforcing expectations that the Bank of Japan would raise interest rates as early as next month despite a controversy over the central bank governor's personal finances.
The core consumer price index, which excludes fresh food costs, rose 0.6 percent in May from a year earlier, data showed, matching the median from a poll of economists.
Consumer prices have been climbing steadily since October
, and the Bank of Japan has said it expects prices to keep rising as demand starts to exceed supply on the back of a firmer economy.
The Bank of Japan has said a shift from its current policy of pegging interest rates at zero would depend on the economy and prices.
While the government has supported Toshihiko Fukui, the central bank chief, in the controversy over his finances, it kept pressure on the bank to maintain its extremely easy monetary policy.
The Bank of Japan is seeking to end an era of zero interest rates amid what it views as inflationary risks to the economy. But the government is wary of such a move in rates as it fears an adverse effect on the economic recovery, as well as higher costs for funding the massive state debt.
"We want the BOJ to maintain zero interest rates to support the economy," Shinzo Abe, the chief cabinet secretary, told a news conference Friday.
Sadakazu Tanigaki, the finance minister, agreed. "The Bank of Japan should continue its policy to ensure that the economy clearly emerges from deflation and does not return to it," he said.
But markets seem to be prepared for a policy shift as early as the bank's policy-setting meeting on July 13 and 14
Naoki Iizuka, chief economist at Dai-ichi Life Research Institute, said,
"The price data was in line with market expectations and the BOJ's outlook, so an interest rate hike in July remains the most likely scenario."
Separate data showed a continued recovery in the job market. Labor conditions are also being closely watched by the central bank's policy makers.
Japan's seasonally adjusted unemployment rate unexpectedly fell by 0.1 percentage point to 4.0 percent in May, its lowest since April 1998, data from the Ministry of Internal Affairs and Communications showed.
The number of unemployed fell year-on-year for the sixth straight month, while the number of salaried employees rose above 55 million for the first time, a ministry official said.
"With a tighter job market, costs for companies will likely rise and that will push up prices of services," said Takuji Aida, chief economist at Barclays Capital in Japan.
Other data showed that overall household spending in Japan fell 1.8 percent in May from a year earlier in real terms, a slightly better reading than the median market forecast of a 2.2 percent fall.
The Nikkei 225 stock average climbed 384.03 points, or 2.5 percent, to 15,505.18 at the close in Tokyo. The broader Topix added 39.21 points, or 2.5 percent, to 1,586.96.
Yosano, who appears less hostile to a rate rise than others in the administration, added that Friday's economic data showed that Japan was "clearly in a period of long-term growth."
Fukui has kept a hawkish tone on monetary policy amid the dispute over his investments, saying policy shifts should be early but in small increments.
Analysts are now shifting their focus to the central bank's quarterly survey, known as the Tankan, which gauges corporate sentiment and is scheduled to be released Monday.
With the index for business confidence among major manufacturers already at a high level, the bank is focusing on whether capital spending, now in its fourth year of recovery, will remain robust for the year ending March.

They have been crying wolf for awhile so this may be another false dawn for the long awaited Carry Trade tsunami that may drown the heavily indebted and bring relief to millions priced out of the biggest housing bubble the world has ever known, or wants to know again.

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Japan May housing starts rise 6.7 pct yr-on-yr, ahead of market estimate

TOKYO (XFN-ASIA) - Housing starts in May rose 6.7 pct from a year earlier to 108,652, the fourth straight monthly increase, the Ministry of Land, Infrastructure and Transport said.

The rise was higher than market's estimate for a gain of 5.1 pct, based on a Nihon Keizai Shimbun poll.

Housing starts were up 15.0 pct year-on-year in April.

In May, starts on houses for rent rose 13.1 pct to 44,744, rising for the 14th straight month. Starts on owner-occupied houses were up 4.5 pct at 33,060, while starts on condominiums were unchanged at 30,164 units.

Looks like they might do it this time around.

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