Bank of Japan Meeting: Updated March 4, 2024.

 

Bank of Japan members at Dec. meeting saw need for policy normalization debate

Article Source: https://mainichi.jp/english/articles/20231227/p2g/00m/0bu/015000c

Ideas:

The Bank of Japan is always talking about change, but for the most part, not much is going to happen soon, especially since Japan has entered another recession from the Oct. to Dec. quarter.

The 2 percent inflation target is related to consumer demand and consumer spending and not companies passing-on their material and labor costs onto the next in the supply chain including the final customer.

The BOJ did increase the bond yields to 1 percent, as most likely, a test to see how the financial markets would respond.

There are not going to be any real changes, only that a minor change here or there, and maybe won't be noticeable to the  general public, if at all.

The financial markets and even the Japanese stock market might be waiting for some change with the current policy of the BOJ, but the BOJ doesn't do things quickly, and may take a long time to make any changes if any at all.

For the most part, maybe the BOJ has been behind the curve for a very long time, and now really doesn't know how to get out of its current situation, without disrupting to financial markets.

Wage increases are going to be the key for what the BOJ decides to do. If the wage increases are significant, it might be enough to spur and change in the current BOJ policy, but maybe not, if the Japanese economy in April has not improved.

The challenges is to get all companies, large, midsize, and small companies, or enough of them, to give wage increases to impress the BOJ to makes some changes.

It seems all the BOJ does is talk about changes, but again, hasn't done much over the past two years or since the pandemic has ended. Its like they are afraid to make any changes for fear of upsetting to financial markets.

They have had many years to examine positive effects and side effect of its current policy. If they can't see now, maybe they will never see what the positive effects are and the side effects.

High prices, from companies passing-on their material costs to the next in the supply chain has been hurting consumption for a very long time, and the BOJ or the Japanese government has not done much and or doesn't know what to do the curb inflation.

Higher prices should be a combination of consumer demand, consumer spending, and companies increasing prices as they see better demand in the Japanese economy, and not just from companies passing-on their material costs to the next in the supply chain.

Japan has been in a state of stagnation and or deflation for many years, if not decades. And companies, for the most part, are to blame, as they been very reluctant to pass-on their material costs to the next in the supply chain.

The Bank of Japan is relying on Japanese companies to increase wages and a way to solve all the Japanese economies challenges, but many Japanese companies might not be able to meet the demand of the BOJ or the Japanese government with wage increases, as many small and midsize companies have profit margins that are just to narrow to increase wages at this time.

Even if the small and midsize companies were to get the subsidies offered by the government to help them with wage increases, it might not be enough, as maybe the subsidies might not cover all of the monthly increases in wages.

Have a nice day and be safe!