Tag: Japan

Jamie Dimon, Tim Cook, Jeff Bezos attend Joe Biden’s state dinner for Japan’s Fumio Kishida

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Leading technology, finance, and media executives gathered at the White House Wednesday for a state dinner honoring Japanese Prime Minister Fumio Kishida, as US President Joe Biden looked to bolster security and economic ties between the two allies with the star-studded celebration.

JPMorgan Chase & Co.’s Jamie Dimon, Larry Fink of Blackrock Inc., Apple Inc.’s Tim Cook and Jeff Bezos of Amazon.com Inc. were among the business leaders attending the event, part of a guest list that highlighted the ties between the US and Asia’s second-largest economy.

Jon Gray of Blackstone Inc., Neil Bluhm, chairman of Rush Street Interactive Inc., International Business Machines Corp. CEO Arvind Krishna, SoftBank chief Masayoshi Son and former Mitsubishi Corp. Chairman Ken Kobayashi are also attending.

Attendees are feasting on a three-course meal that includes house-cured salmon and dry-aged ribeye steak, paired with wines from Washington state and Oregon. While Kishida’s arrival missed the peak bloom of Washington’s cherry trees, many originally gifted to the US by Japan, celebrations of spring dominated the dinner with decorations of butterflies, Japanese gardens, and an artistic depiction of a koi pond. Guests will be entertained by American singer-songwriter Paul Simon.

Many of the attendees nodded to the defense issues that largely dominated Kishida and Biden’s meetings Wednesday — the first official visit by a Japanese leader since 2015 — as the leaders sought to cement their military ties in the Indo-Pacific with an eye to countering China’s growing influence in the region and increasingly assertive behavior. But the visit also saw the leaders unveil a number of initiatives to strengthen partnerships and investment in technology.

Prominent executives from Silicon Valley along with Cook and Bezos included Microsoft Corp. President Brad Smith, whose company announced Tuesday it will invest $2.9 billion over the next two years to boost its hyperscale cloud computing and artificial intelligence infrastructure in Japan.

Sanjay Mehrotra of Micron Technology Inc. and Megan Myungwon Lee, chairwoman of Panasonic Corp. of North America are also attending, alongside Los Angeles Dodgers chairman and CEO of Guggenheim Partners Mark Walter.

Biden also invited two prominent labor allies — David McCall, president of the United Steelworkers and Shawn Fain of the United Auto Workers Union. McCall’s union is opposing a politically contentious deal for Japan’s Nippon Steel Corp. to acquire United States Steel Corp. The high-profile bid has sparked an election-year firestorm with Biden earlier Wednesday reiterating his support for US workers who seek greater concessions in a possible deal.

Kishida has encouraged US investment in Japan around key technologies such as semiconductors, AI and quantum computing, during a luncheon Tuesday in Washington with business executives including Gary Cohn, vice chairman at IBM, and a onetime chief economic adviser to former President Donald Trump, Biden’s general-election rival. Also at that lunch were Pfizer Inc. Chief Executive Officer Albert Bourla, Boeing Co. defense chief Ted Colbert, and Western Digital Corp. CEO David Goeckeler.

Among the celebrities who scored coveted invitations to the state dinner are actor Robert De Niro and Olympic medalist Kristi Yamaguchi. Former President Bill Clinton and Hillary Clinton are also attending along with Treasury Secretary Janet Yellen, Federal Reserve Chairman Jay Powell and New York Governor Kathy Hochul. Also attending is Cecile Richards, the former president of Planned Parenthood.

Biden’s list also includes a number of prominent donors, including Fred Eychaner, Mindy Gray and Michael Sacks, chairman of Grosvenor Capital Management. Sacks hosted a fundraiser for Biden earlier this week in Chicago.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

First Global’s Devina Mehra cautious on market in the near term, adds new names to portfolio

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Devina Mehra, the Founder, Chairperson, and Managing Director of First Global, is cautious on the Indian market for the next 2-3 months and advises giving more weightage to market indicators over economic conditions while making investment decisions.

“While I am cautious about the next one to three months, that does not mean that you should be out of the market. I always say that there is a risk of being invested in the market to the risk of a downside, but there is also a risk of not being invested and missing out on an up move,” she said.

First Global, she said, has been overweight on Japan for a year now and on India in its global funds. However, China hasn’t bottomed out yet.

Mehra included some metal companies as part of the quarterly portfolio adjustments.

She is also overweight on auto and pharmaceutical sectors since the beginning of 2023 and added a few names in the spaces during the portfolio rejig. Construction is another sector on her radar.

“IT is one space I am watching for bottoming out this year. But again, still waiting for the signals for that to happen,” she said.

Also Read | Japan’s bond market liquidity improves as BoJ loosens its grip

Mehra believes that unless there is a significant risk of a major crash, which she does not foresee, investors may opt to hedge their positions to be cautious.

“We were hedged up until now, those hedges expired. We are just reevaluating how much to hedge now. But we are not making a big cash call and we plan to be mostly invested,” she said.

Also Read | Fitch cuts China outlook to negative on steady rise in debt

For the entire interview, watch the accompanying video

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan starts issuing eVisas for Indian tourists; Here’s how to apply

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Japan has started issuing eVisas to Indian tourists, introducing a system which eliminates the need for physical visa stickers in passports. The innovative programme enables Indians travelling to Japan to electronically apply for visas through the designated Japan Visa Application Centres operated by VFS Global, according to reports.

It offers a single-entry short-term visa catering specifically to tourism purposes and grants a stay of up to 90 days in the island nation.

The citizens of India as well as foreign nationals residing in the country are eligible to apply for this eVisa.

Under the new system, the applicants will have to submit their applications to the Visa Application Centers managed by VFS Global, similar to the process which was previously followed. However, instead of receiving the traditional visa sticker affixed to their passports, the applicants will now receive an electronic visa.

Here’s how to initiate the application process for a tourist visa in Japan:

Step 1. Visit the official website of the Japan Visa Application Centre, managed by VFS Global, at visa.vfsglobal.com/ind/en/jpn/.

Step 2: Click on the ‘Temporary Visitor Visa’ option. Download the visa application form and fill it out accurately. Take a printout and ensure that all required fields are filled.

Step 3: Book an appointment to submit your application form at the Visa Application Centre. You will get an appointment confirmation email containing the letter of appointment.

Step 4: During your appointment, present the visa application form at the centre. Wait for an email notification. You can also track the visa application status online using the reference number from the invoice or receipt issued by the centre.

Under the new process, the successful applicants for the eVisa will receive an electronic visa instead of having the traditional visa sticker attached to their passports. However, travellers will have to display a “visa issuance notice” at the airport as part of the operational process.

Step 5: During the check-in at the airport, display the “visa issuance notice” on your device. The travel agency will provide you with a “Visa Issuance Notice” which contains a two-dimensional barcode. Scan the barcode and type all the necessary details to access the notice. Click on ‘Display’ to view the electronic “visa issuance notice.”

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan hit by magnitude 6.1 earthquake, tremors felt near Fukushima

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A magnitude 6 earthquake has hit coastal Japan, news agency Bloomberg reported.

An earthquake with a preliminary magnitude of 6.1 hit Iwate and Aomori prefectures in northern Japan on Tuesday, the Japan Meteorological Agency said.

Japanese media has said there is tsunami threat from the recent earthquake.  Tremors were felt near Fukushima.

The epicenter was northern coastal part of Iwate Prefecture, the Japan apan Meteorological Agency said, adding that a tsunami warning had not been issued.

There were no reports of immediate damage.

With inputs from Reuters

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan’s leap into global arms trade: Cabinet greenlights fighter jet exports

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Japan’s Cabinet OK’d a plan to sell future next-generation fighter jets to other countries on Tuesday, its latest step away from the pacifist principles the country adopted at the end of World War II.

The controversial decision to allow international arms sales is expected to help secure Japan’s role in a year-old project to develop a new fighter jet together with Italy and the UK, but it’s also part of a move to build up Japan’s arms industry and bolster its role in global affairs.

For now, Tokyo says that it doesn’t plan to export co-developed lethal weapons other than the new fighters, which aren’t expected to enter service until 2035.

Here is a look at what the latest change is about and why Japan is rapidly easing weapons export rules.

WHAT’S CHANGING?

On Tuesday, the Cabinet approved a revision to its guidelines for selling defence equipment overseas and authorized sales of the future jet. The government says that it has no plans to export other co-developed lethal weapons under the guidelines, and it would require Cabinet approval to do so.

Japan has long prohibited most arms exports under the country’s pacifist constitution, although it’s begun to take steps toward a change amid rising regional and global tensions. In 2014, it began to export some non-lethal military supplies, and last December, it approved a change that would allow sales of 80 lethal weapons and components that it manufactures under licenses from other countries back to the licensors. The change, which was made in December, cleared the way for Japan to sell US-designed Patriot missiles to the United States, helping replace munitions that Washington is sending to Ukraine.

The decision on jets will allow Japan to export lethal weapons it co-produces to other countries for the first time.

WHAT IS THE NEW FIGHTER JET?

Japan is working with Italy and the UK to develop an advanced fighter jet to replace its ageing fleet of American-designed F-2 fighters, and the Eurofighter Typhoons used by the UK and Italian militaries.

Japan, which was previously working on a homegrown design to be called the F-X, agreed in December 2022 to merge its effort with a British-Italian program called the Tempest. The joint project, known as the Global Combat Air Program, is based in the UK and hasn’t yet announced a new name for its design.

Japan hopes the new plane will offer better sensing and stealth capabilities amid growing tensions in the region, giving it a technological edge against regional rivals China and Russia.

WHY IS JAPAN CHANGING ITS STANCE ON ARMS EXPORTS?

In its decision, the Cabinet said that the ban on exporting finished products would hinder efforts to develop the new jet and limit Japan to a supporting role in the project. Italy and the UK are eager to make sales of the jet to defray development and manufacturing costs.

UK Defense Minister Grant Shapps has repeatedly said Japan needs “updating” to not cause the project to stall.

Kishida sought Cabinet approval before signing the GCAP agreement in February, but it was delayed by resistance from his junior coalition partner, the Buddhist-backed Komeito party.

Exports would also help boost Japan’s defence industry, which historically has catered only to the country’s Self Defense Force, as Kishida seeks to build up the military. Japan began opening the door to some exports in 2014, but the industry has still struggled to win customers.

The change also comes as Kishida is planning an April state visit to Washington, where he is expected to stress Japan’s readiness to take a greater role in military and defence industry partnerships.

Japan sees China’s rapid military buildup and its increasing assertiveness as threats, especially growing tensions in the disputed East and South China Seas. Japan also sees increasing joint military exercises between China and Russia around Japan as a threat.

WHY ARE ARMS EXPORTS DIVISIVE?

Because of its wartime past as an aggressor and the devastation that followed its defeat in World War II, Japan adopted a constitution that limits its military to self-defence and long maintained a strict policy to limit transfers of military equipment and technology and ban all exports of lethal weapons.

Opposition lawmakers and pacifist activists have criticized Kishida’s government for committing to the fighter jet project without explaining to the public or seeking approval for the major policy change.

Recent polls show public opinion is divided on the plan.

To address such concerns, the government is limiting exports of co-developed lethal weapons to the jet for now and has promised that no sales will be made for use in active wars. If a purchaser begins using the jets for war, Defense Minister Minoru Kihara said, Japan will stop providing spare parts and other components.

WHAT’S NEXT?

Potential markets for the jet include the 15 countries with which Japan has defence partnership agreements, such as the United States, Germany, India and Vietnam. A defence official said Taiwan — a self-governed island that China claims as its territory — is not being considered. He spoke on condition of anonymity due to briefing rules.

More weapons and components could be added to the approved list under the new export guidelines.

When Kishida goes to Washington in April, he’s likely to talk to US leaders about potential new defence and weapons industry cooperation. The new policy could also help Japan push for a bigger role in alliances and regional defence partnerships like Australia, the US and the UK’s AUKUS.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nissan turns to aggressive electrification to drive down costs and increase sales

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nissan will expand its electric vehicle lineup, develop more powerful batteries and cut production costs, while speeding up the whole process, in what the Japanese automaker’s chief called “The Arc” pathway to higher sales by 2030.

“The auto industry is now being forced to reshape its values so we can say continuous change is the new normal,” Chief Executive Makoto Uchida told reporters Monday, in outlining a sprawling but ambitious business plan.

“Nissan must change. We cannot succeed if we continue along the same path.”

Costs will come down for electric models so they’ll be about the same as gasoline-engine models by fiscal 2030, while global sales will grow by a million vehicles during that period, he added.

Last year, Nissan Motor Co. sold nearly 3.4 million vehicles around the world, up about 5% from the previous year.

The company is planning 30 new models over the next three years, 16 of them EVs. Nissan plans to launch 34 EV models from fiscal 2024 through fiscal 2030, so that EVs will account for 40% of its global offerings by fiscal 2026, and 60% by the end of the decade.

To slash costs, Nissan says it will start working with suppliers from the development stage, upgrade production methods to incorporate robotics and artificial intelligence, and have models sharing components — not just platforms but also parts. It also promised innovation in autonomous vehicles to make driving safer.

Nissan, based in the port city of Yokohama, southwest of Tokyo, will leverage its partnerships around the world, including those with smaller Japanese maker Mitsubishi Motors Corp., with Dongfeng Nissan in China, and in the alliance it has with French automaker Renault.

Earlier this month, Nissan announced it was in talks on forming a partnership with Japanese rival Honda Motor Co. in electrification and artificial intelligence.

Such tie-ups between rivals are relatively unusual but are needed to keep up with surging demand for more sustainable transport as concerns grow over carbon emissions and sustainability, analysts say.

Nissan, Japan’s No. 2 automaker, was an early EV adapter, coming out with the Leaf EV in late 2010. In recent years, Japanese automakers have fallen behind Tesla of the US and Chinese manufacturers like BYD.

Automakers, including Nissan, have taken a hit from shortages of computer chips and other parts due to disruptions related to the pandemic.

Nissan’s offerings of new EVs, plug-ins and hybrids will increase across all global markets, including the US, Europe, Japan, the rest of Asia, Australia and Africa, Uchida said.

“The Arc plan shows our path to the future. It illustrates our continuous progression and ability to navigate changing market conditions. This plan will enable us to go further and faster in driving value and competitiveness,” he said, referring to Nissan’s goals.

Nissan’s stock price, which shot up earlier this month after its talks with Honda was announced, finished 2% lower shortly before Uchida’s news conference.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Japan sees 7.8% rise in exports in February, led by cars and machinery

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Japan’s exports rose 7.8% in February from a year earlier on strong shipments of cars and electrical machinery, the government said on Thursday. Exports in February totalled 8.2 trillion yen ($55 billion), marking the third straight month of growth, according to preliminary customs data.

The report showed the trade deficit sank by more than half a year to 379 billion yen ($2.5 billion), marking the second straight month of a deficit. Exports to China rose just 2.5% and those to all of Asia edged 2.3% higher on year, suggesting that demand has moderated. Exports to the United States rose 18% and exports to the EU were up almost 16%.

The picture for imports was mixed, with China supplying 1.7 trillion yen ($236 billion), a nearly 17% annual increase that more than doubled Japan’s deficit with its giant neighbour. In all, imports edged up 0.5%, totalling nearly 9 trillion yen ($60 billion), as prices for key commodities such as coal and liquefied natural gas fell.

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The strength in exports comes as good news, coming a day after the Bank of Japan raised its key interest rate for the first time in 17 years, no longer setting it at below zero. The central bank has promised to still keep lending easy as it gauges various signs of how growth holds up.

One positive recently is a solid rebound in tourism, which counts statistically as exports, with recent data showing that visitor numbers have exceeded those before the COVID-19 pandemic. Japan restricted entry into the country during the pandemic.

Exports have remained relatively strong even as Japan’s economy has slowed, hitting a record high of just over 100 trillion yen ($670 billion) in 2023. Japan is now the world’s fourth largest economy, behind Germany.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Yen flounders near four month low, Fed in spotlight

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The yen languished near a four-month low against the U.S. dollar and a 16-year trough against the euro on Wednesday as traders wagered Japan’s monetary settings will remain accommodative even as the central bank ends its negative interest rate policy.

While the Bank of Japan on Tuesday ushered in the country’s first rate hike in 17 years, the central bank said it expected to maintain accommodative conditions for the time being, keeping pressure on the yen as U.S.-Japanese rate differentials remain stark.

On Wednesday, the yen weakened to a four-month low of 151.34 per dollar and was last off 0.26% at 151.23, with the multi-decade low of 151.94 within sight and the threat of intervention by Japanese authorities resurfacing.

“I think the focus is again around 152 levels,” said Christopher Wong, currency strategist at OCBC, adding that there was a fair chance of seeing some smoothing if dollar/yen continues to go higher towards 152.

Wong said the move for dollar/yen in the near term will be more a function of U.S. rates with the Federal Reserve decision due later on Wednesday.

Against the euro, the yen weakened to 164.35, its lowest since 2008, while against the pound, yen weakened to 192.37, its lowest since 2015. Japan markets are closed on Wednesday for a holiday.

In a historic shift from decades of massive monetary stimulus, the Japanese central bank on Tuesday ended eight years of negative interest rates and other remnants of unorthodox economic policy.

The Asian currency fell 1% against the dollar on Tuesday after the BOJ decision as most investors had already priced in a change, with analysts suggesting that the “dovish hike” cemented the view that the yen carry trade was far from over.

Low Japanese rates have made the yen the funding currency of choice for carry trades, in which traders typically borrow a low-yielding currency to then sell and invest the proceeds in assets denominated in a higher-yielding one.

The Australian dollar touched a more than three-week high on the yen at 98.86, having gained 0.7% overnight.

“The carry trade versus the major currencies continues to be in play and is expected to continue for a while,” Daniela Hathorn, senior market analyst at Capital.com said. “This means the yen is likely to see further weakness, especially if the other central banks continue to delay cutting rates.”

US Fed Day

The main spotlight for the day remains on the Fed and although the central bank is not expected to move, its economic projections and comments from Chair Jerome Powell will be in focus.

Last week’s stronger than expected inflation reports led traders to further reduce their bets on rate cuts this year, with markets now pricing in 73 basis points (bps) of easing this year. At the start of the year, traders were pricing in 150 bps of cuts.

Traders are pricing in a 59% chance of the Fed starting its easing cycle in June, the CME FedWatch tool showed, sharply lower than earlier expectations.

“Given the recent rebound in inflation, the Fed decision will be closely scrutinised for whether there is a shift downwards in the median dot projection from 3 to 2 cuts this year,” said Nicholas Chia, Asia macro strategist at Standard Chartered.

“If that happens, I think Powell will try to strike a dovish note in his press conference to prevent a further bear steepening of the US curve.”

The dollar index, which measures the U.S. currency against six rivals, rose to 0.019% to 103.87. The euro was steady at $1.08695.

The Aussie was 0.12% higher at $0.65395, while the New Zealand dollar was little changed at $0.6055, a day after Australia’s central bank held interest rates steady on Tuesday as expected, while watering down a tightening bias to say that it was not ruling anything in or out on policy.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Yen slides past 150 per dollar as yield gap with US remains wide

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The yen weakened past 150 per dollar after the Bank of Japan ended the world’s last negative policy rate while keeping financial conditions easy for now. Bonds and shares both gained.

The Japanese currency slid as much as 0.8% to 150.38 per dollar, the weakest in two weeks, as of 2:20 p.m. in Tokyo. Government bonds advanced on the BOJ’s slightly dovish tone, sending the 10-year yield down 2 basis points to 0.735%. The benchmark Topix equity gauge climbed 0.8% while the Nikkei 225 Stock Average rose 0.4%.

Ahead of the decision some 90% of central bank watchers had seen the risk of authorities ending their negative rate settings at the meeting. The likelihood had been bolstered after the largest union group announced first-round results to annual wage negotiations that exceeded expectations.

“The decision today itself may be considered quite dovish, dragging the yen lower,” said Koji Fukaya, a fellow at Market Risk Advisory Co. in Tokyo, who said the ending of negative rates and yield-curve control was already priced in. “Keeping an accommodative stance does not mean they will not raise rates from here and therefore, investors would need time to assess the policy outlook.”

The yen had weakened slightly over the course of the week leading up to the BOJ decision as the dollar appreciated on the outlook for slowing rate cuts from the Federal Reserve.

Expectations for the yen to outperform its peers this year had all but evaporated recently, with strategists earlier this month forecasting the currency to end 2024 within a few percent of where it started.

Meanwhile, benchmark 10-year Japanese government bond yields had been edging higher while the nation’s stocks have rallied this year, with the Nikkei 225 reclaiming the high it set back in 1989.

High rates and a strong currency in the US have kept Japan’s 10-year yields and the yen under pressure — the 10-year US Treasury yield is around 4.3%.

The dynamic looks set to continue despite the BOJ’s hike given ongoing strength in the US economy and resilient consumer spending there. In addition, Japan’s central bank will continue to buy bonds and pledges to respond to any rapid rise in yields.

The “new era” of positive interest rates is “a confirmation of the recovery in Japanese economy,” said Charu Chanana, market strategist for Saxo Capital Markets Pte. “Higher returns on savings and investments in Japan can fuel spending power for consumers, and builds a case for Japanese equities to extend their momentum.”

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Bank of Japan raises interest rates for the first time since 2007

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bank of Japan on Tuesday raised its interest rates for the first time since 2007.

It increased its short-term interest rates to 0% to 0.1% from the previous -0.1%, as per the statement at the end fo the policy meeting.

#BREAKING | BoJ ends negative interest rates

Alert: BoJ raises interest rates for the first time since 2007#Japan pic.twitter.com/4zmXrVg34l

— CNBC-TV18 (@CNBCTV18Live) March 19, 2024

The BoJ pulled the curtain on the most aggressive monetary easing program in modern history by ending the world’s last negative interest rate along with its yield curve control mechanism, a widely expected move that weakened the yen.

The bank said financial conditions will remain accommodative, indicating this isn’t the beginning of an aggressive tightening cycle of the sort seen in US and Europe in recent years, a factor that might explain the slide in the yen after the announcement. The vote for the rate hike was 7-2.

The BOJ also scrapped the yield curve control program while pledging to keep buying long-term government bonds as needed. It also ended its purchases of exchange-traded funds.

The yen fell against the dollar from 149.29 just before the announcement to as weak as 149.92 afterwards.

In ending the negative rate, Governor Kazuo Ueda makes history by turning the page on the BOJ’s experimental monetary easing program after years in which Japan’s central bank was a global outlier. The policy gap now becomes even more stark as the BOJ makes its first upward move in close to 17 years just as its peers around the world are mulling cutting their rates after historically aggressive tightening campaigns.

The BOJ said its stable inflation target of 2% has come into sight as a virtuous cycle of wages feeding demand-led inflation is emerging. Rengo, Japan’s biggest umbrella group for labor unions, reported Friday that wage talks resulted in an initial deal for 5.28% increases, the best outcome since 1991. That fueled market speculation that the conditions were finally in place for a rate move after Ueda had repeatedly emphasized the importance of wage trends.

Some 38% of 50 economists surveyed by Bloomberg had expected the March rate liftoff, while another 54% predicted the move would come a month later. The survey was conducted before the strong results from annual wage negotiations that fueled widespread speculation the central bank wouldn’t wait.

As part of its policy shift, the central bank said it would ditch its buying of real estate investment trusts, too. The BOJ adopted the highly unusual measure of buying risk assets like ETFs in 2010, ultimately becoming the biggest single holder of Japanese stocks, before buying operations slowed to only three instances last year. The optics of using the measure became increasingly awkward as Japanese stocks hit a record high this month, begging the question of why the equity market needed support.

Ueda, the first former academic to take the helm at the BOJ, had previously adjusted aspects of the ultra-easy policy settings he inherited when he became governor in April, tweaking the parameters of YCC in both July and October. Few analysts predicted Ueda would be able to unwind within a year so many policies that had become a headache for the central bank.

Ueda’s predecessor Haruhiko Kuroda launched a shock-and-awe stimulus bazooka in April 2013 with the aim of achieving 2% inflation in two years. As that goal stayed out of reach, Kuroda adopted the negative rate and then the YCC program in 2016. His focus thereafter increasingly fell on enhancing the sustainability of these monetary settings with policy tweaks.

The prolonged monetary easing led to an expansion of the BOJ’s balance sheet to the point where it’s now worth 127% of the annual economy, four times bigger than the Federal Reserve’s assets-to-economy ratio. Even so, inflation didn’t really kick in until the supply shocks triggered by Covid-19 and Russia’s war in Ukraine. Japan’s key inflation gauge has stayed at or above the 2% target for 22 months, and that stretch is forecast to continue with national price data due Friday.

Ueda’s post-decision press conference usually begins at 3:30 p.m. in Tokyo. At that event he will elaborate on the thinking behind Tuesday’s policy decisions.

With inputs from Bloomberg

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow