TOKYO (Reuters) – The Bank of Japan’s negative interest rate policy has had little positive impact on the economy and prices, over half of economists surveyed by Reuters said.
The views underline the mounting challenges facing the central bank in trying to fire up inflation to its 2% target, as years of ultra-loose monetary policy and near-zero rates have had only modest success at the cost of eroding financial institutions’ margins.
That explains why a majority of the polled economists expect the next move by the BOJ would be to taper its massive stimulus, possibly sometime next year.
It also suggests criticism over the controversial policy is spreading beyond Europe, where countries such as Switzerland are under increasing pressure to adjust its ultra-loose policy to address the demerits of negative rates.
Among the 41 economists polled by Reuters Jan. 6-17, 24 said the BOJ’s negative rate policy did not help the economy and prices, while 17 said they did.
“Negative rates may have had some positive effects on financial and property markets. But the side-effects, such as the hit to banks’ earnings, have also been big,” said Mitsumaru Kumagai, chief economist at Daiwa Institute of Research.
“As a whole, we don’t think there has been much positive effect” on Japan’s economy and prices, he said.
The poll also showed 28 of 42 economists, or 67%, expect the BOJ’s next step to be a withdrawal of stimulus, up from 61% in the December poll. Those who predicted such action said it would happen sometime next year or later, the poll showed.
The ratio of those who predict the BOJ’s next move to be an expansion of stimulus stood at 33%, down from the previous month’s 39%.
“We don’t expect the BOJ to ease further in the near term,” said Arata Oto, market economist at Societe Generale Securities Japan.
“The BOJ is expected to maintain its scenario projecting a pick-up in global growth, while sticking to its easy-policy bias to help the economy build momentum to hit its 2% inflation target,” he said.
That view was backed by a Reuters poll predicting that the BOJ will keep monetary policy steady and nudge up its economic growth forecast at a two-day rate review ending on Tuesday, signaling that no immediate easing was forthcoming despite lingering overseas risks.
STAGNANT GROWTH AHEAD
Under a policy dubbed yield curve control, the BOJ guides short-term rates at -0.1% and the 10-year government bond yield around 0% via aggressive asset buying.
Inflation remains distant from the BOJ’s 2% target despite years of heavy money printing, forcing the central bank to maintain a radical stimulus program despite the rising cost such as the hit to financial institutions’ profits.
Analysts polled expect core consumer inflation, which includes oil products but not fresh foods, to hit 0.6% in the current fiscal year ending in March and 0.5% the following year.
They also expect Japan’s economy to have shrunk an annualized 3.6% in the October-December quarter due to the hit from October’s sales tax hike, and rebound by a modest 0.8% in the current quarter.
Japan’s economy will likely expand 0.5% in the fiscal year beginning in April and 0.8% the following year, thanks in part to an expected boost from the government’s $122 billion fiscal stimulus package, the poll showed.
(Reporting by Kaori Kaneko; Polling by Shaloo Shrivastava and Khushboo Mittal; Editing by Leika Kihara & Shri Navaratnam)
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
