KATO WEEKLY REPORT

Report Archives

2005 Archives

December 27, 2005

T「Core CPI registered +0.1 %」

  1. The core CPI for November registered +0.1 %, enhancing the probability of the BOJ’s removal of its quantitative easing in the next spring
  2. More room to the ceiling in the “Banknote rule”
  3. Reduction in the reserve ratios will be necessary?
  4. Breakdown of the balance of current accounts at the BOJ by category of financial institutions
  5. The Outlook for the Tokyo Money Market until the first 10 days in the new year

December 19, 2005

T「The Foreign Exchange Fund Special Account in the Koizumi’s structural reforms」

  1. The Foreign Exchange Fund Special Account in the Koizumi’s structural reforms
  2. Complaints of elderly people about zero interest rates on deposits vs. inflation targeting
  3. The government is divided in its views on inflation targeting
  4. The results of Tankan survey have intensified Governor Fukui’s confidence in the scenario for economic recovery
  5. The BOJ is reconsidering the “numerical definition of price stability”
  6. The Outlook for this week’s Tokyo Money Market

December 12, 2005

T「Is an asset bubble inflating ?」

  1. Is an asset bubble inflating ? A ripple created by the remarks of Mr. Okuda, Chairman of Toyota Motor Corporation
  2. The most optimal monetary policy against asset price bubbles
  3. A lunch meeting between the government’s top members and the BOJ executives: Governor Fukui succeeded in obtaining the understanding of Prime Minister Koizumi
  4. Governor Fukui’s intention in his speech on December 8 was overstated significantly by news agencies
  5. The confrontation between the government and the BOJ concerning the GDP deflator
  6. The Outlook for this week’s Tokyo Money Market

December 5, 2005

T「Monthly purchase by the BOJ of JGBs worth 2 trillion yen?」

  1. Monthly purchase by the BOJ of JGBs worth 2 trillion yen is demanded by a lawmaker of the Liberal Democratic Party
  2. The issues in the assertions on the revision of the Bank of Japan Law
  3. The speeches by Deputy Governor Muto, Deputy Governor Iwata and Deliberative member Mizuno
  4. Governor Fukui at the G7 meeting made a remark on the possibility of lifting the quantitative easing
  5. The Outlook for this week’s Tokyo Money Market

November 28, 2005

T「A review of the BOJ Law suggested by polititcians」

  1. A review of the BOJ Law was suggested by the chancellor in order to curb an early termination of the quantitative easing
  2. Governor Fukui in an interview: “Policy change will be made 100 % based upon the BOJ’s judgment.”
  3. The removal of quantitative easing in around April is likely, but the raise of overnight interest rate may be delayed
  4. The core CPI for October registered±0%. A turn to positive numbers is highly likely in and after November
  5. The Outlook for this week’s Tokyo Money Market

November 21, 2005

T「BOJ's exit policy under the political pressures」

  1. Warning remarks to the BOJ were issued one after another by the government and the ruling parties
  2. Governor Fukui reconfirmed his stance that the BOJ would bear up under the political pressures at his press conference on November 19
  3. The attitude of the BOJ to the announcement on the new core CPI excluding fresh food and energy
  4. Explanation by the BOJ in order to obtain the government’s understanding
  5. The Outlook for this week’s Tokyo Money Market

November 15, 2005

T「Autonomous Factors which will affect the absorption of excess reserves」

  1. Governor Fukui stressed the necessity to resuscitate the function of interest rates in his recent speech
  2. Likely disputes over the price indexes between the BOJ and the government
  3. The Autonomous Factors which will significantly affect the absorption of excess reserves
  4. The Outlook for this week’s Tokyo Money Market

November 1, 2005

T「Special issue: The reshuffle in the Koizumi Cabinet, the BOJ’s Outlook Report and the exit policy」

  1. The influence of the reshuffle in the Koizumi Cabinet on the removal of quantitative easing
  2. “Very low short-term interest rates” is the wording adopted in the October Outlook Report of the BOJ
  3. The prospective actual exit policy

October 31, 2005

T「Mr. Bernanke's inflation targeting and BOJ」

  1. The next Fed chairman Bernanke and inflation targeting: Influences on the BOJ ?
  2. The case of Switzerland where long-term interest rates declined remarkably after the removal of the zero interest rate policy
  3. The Outlook for this week’s Tokyo Money Marke

October 25, 2005

T「Best seller novel “Default” and BOJ」

  1. The reporter in charge of the BOJ who wrote the best seller novel “Default”
  2. The remarks by the executives of the BOJ were not so exciting as the headlines depicted
  3. The largest fiscal net payments in the past due to the massive redemption of the JGBs is likely on March 20
  4. A forecast on the Outlook Report to be announced on October 31
  5. The Outlook for this week’s Tokyo Money Market

October 11, 2005

T「Banknotes and JGB purchasing operations」

  1. The relation between the reserve balance and the overnight interest rate
  2. The amount of banknotes in circulation and the JGB purchasing operations
  3. The Outlook for this week’s Tokyo Money Market

October 3, 2005

T「Prospective concrete method for the exit policy」

  1. The September Tankan results: “Rises in crude oil prices were reflected intensely in the survey results,” Governor Fukui said.
  2. The remarks made by Board members of the BOJ toward the termination of the quantitative easing
  3. Prospective concrete method for the exit policy
  4. The Outlook for this week’s Tokyo Money Market

September 26, 2005

T「Governor Fukui showed his confidence」

  1. The slower rate in replacing old banknotes by new ones: Can the rise of stock prices push it up ?
  2. Governor Fukui showed his confidence in the Japanese economy
    “ We have a sufficient power to lead the world economy”
  3. The breakdown of the reserves by holding group
  4. The Outlook for this week’s Tokyo Money Market

September 20, 2005

T「BOJ Governors made Speeches」

  1. In his speech Deputy Governor Iwata referred to a possibility of lifting the quantitative easing even if the core CPI’s increase is +0.3 %
  2. Gradualism was emphasized by Board member Fukuma in his speech on September 14
  3. The Outlook for this week’s Tokyo Money Market

September 13, 2005

T「Will Koizumi's victory affect monetary policy ?」

  1. Will the overwhelming victory of the Liberal Democratic Party in the general election affect monetary policy ?
  2. The monthly report of the BOJ made its clear forecast for the first time that the core CPI will show a positive increase within this year
  3. The revision of the current bill purchasing scheme which is expected to facilitate mobile monetary adjustment
  4. The Outlook for this week’s Tokyo Money Market

September 2, 2005

T「Deputy Governor Muto appealed his neutrality」

  1. The Ministry of Finance just started to manage its cash more efficiently
  2. No policy change is expected at the Monetary Policy Meeting of this week
  3. Deputy Governor Muto appealed his neutrality, wiping out an image created by his speech in June
  4. The Outlook for this week’s Tokyo Money Market

August 22, 2005

T「Outlook for the removal of quantitative easing」

  1. The outlook for the removal of quantitative easing
    (1) Declaration of the achievement of 3 conditions in April 2006 ?
    (2) The target for overnight interest rates after the removal of quantitative easing ?
    (3) The BOJ will start its exit policy from the stage where the reserve balance is at the level of ¥ 30 trillion
    (4) Messages will stabilize the market expectation
    (5) The current pace of purchasing operations of government bonds will be continued at the time of exit policy
    (6) There will be 3 months at the longest between the start of reduction in reserves and raising of interest rates
    (7) The Lombard lending rate will serve as a cap on overnight interest rates
    (8) The Influence on the exit policy of the House of Representatives election
  2. The Outlook for this week’s Tokyo Money Market

August 8, 2005

T「Postal reform legislation and BOJ's policy」

  1. The voting on the postal reform legislation and the fate of monetary policy
    Will the quantitative easing be lifted earlier if the Democratic Party of Japan should come into power ?
  2. The pace of reduction in the current account balances at the BOJ in exit policy
    (1) An extreme case: where short-term funds-supplying operations are stopped
    (2) A realistic case: Operation twist (mild decrease in short-term funds-supplying operations mixed with frequent bill selling operations)
  3. The Outlook for this week’s Tokyo Money Market

August 2, 2005

T「Exit policy is possible without reducing the JGBs operations」

  1. Exit policy is possible without reducing the outright purchasing operations of long-term government bonds
  2. The reserve balance fell short of the target, but the BOJ will maintain the status quo
  3. A joint venture by the world’s largest interdealer broker and the Chinese authorities
    PBOC Governor’s remarks on the necessity of derivatives markets
  4. The Outlook for this week’s Tokyo Money Market

July 25, 2005

T「The pace of reforming the RMB regime, The outlook of the BOJ's meeting」

  1. The pace of reforming the RMB exchange rate regime will be mild
  2. The prolongation of fund supply in BOJ’s operations became conspicuous because of frequent undersubscriptions
  3. Two out of the 3 conditions for lifting the quantitative easing will be satisfied in the first quarter of 2006
  4. The Outlook for this week’s Tokyo Money Market

July 18, 2005

T「Part 2 of my report on the recent trip to China」

  1. Governor Fukui said, “ It is our judgment that the economy is taking off from the landing.”
  2. The ordinary sense of the ordinary people in Beijing and Shanghai ( Part 2 of my report on the recent trip to China)
    - Mobile phones: Many parents buy their child a mobile phone worth their monthly double incomes
    - Automobiles: On Audi, you are hardly ever arrested for speeding
    - Debts of households are expanding rapidly
    - Corruption symbolized by “moon cake with pure gold” and “ moon cake with a house”
    - The downward revision in the projection of the inflation rate suggests monetary easing?
  3. The Outlook for this week’s Tokyo Money Market

July 11, 2005

T「BOJ's independence like a lamplight before ablow of wind ?」

  1. Is the BOJ's independence really in an extremely precarious position ?
    - Monthly Gendai referred to " the shameful big defeat of Governor Fukui"
    - Is Deputy Governor Muto one of the doves as he is ex-Ministry of Finance official ?
  2. Changes in the BOJ's criteria for selection of short-term government securities to be bought in its operations
  3. Forecast on the Monetary Policy Meetings Review of the medium-term economic outlook
    - The future trend of the consumer price index
    - Technical problems in fund-provision
  4. The Outlook for this week's Tokyo Money Market

July 4, 2005

T「RMB regime and Shanghai Money Markets」

  1. The RMB exchange rate regime and Shanghai Money Markets Rapid expansion in the assets of the People's Bank of China(PBOC) due to interventions.
    - The monetary adjustment of the PBOC: The bill-selling operations for sterilization increased substantially.
    - A huge amount of reserve deposits exceeding those at the BOJ: Interest rates on excess reserves are on a trend of reduction.
    - The foreign exchange market is operated by electronic trading system.
    - The short-term financial markets with low liquidity.
    - The yield curve as a bench mark is not in place yet.
    - Prim Minister Wen Jaibao, "It is not good to be in a hurry for success"
  2. At last the June Tankan showed improvements and the core CPI for May registered±0%
    Achieving the reserve target in late July and early August is expected to be technically more difficult than in early June
  3. The Outlook for this week's Tokyo Money Market

June 20, 2005

T「BOJ expects that the inflation rate will show positive」

  1. The BOJ expects that the core CPI will show positive year-on-year changes at around the turn of the year
  2. The pattern of principle for funds-supplying operations since the modification of the proviso in the guideline for money market operations
  3. The Outlook for this week's Tokyo Money Market

June 13, 2005

T「A vicious cycle and The Monetary Policy Meeting of the BOJ in this week」

  1. The Monetary Policy Meeting of the BOJ in this week : No policy change is expected
  2. Despite the massive excess funds in the inter-bank market, growth of money supply slowed down
  3. A vicious cycle : 6-month short-term government securities with zero interest rate and undersubscriptions in purchasing operations of short-term government securities
  4. A close monitoring of the pragmatism of Governor Fukui is recommended
  5. The Outlook for this week's Tokyo Money Market

June 6, 2005

T「The reserve balance fell below ¥ 30 trillion」

  1. The balance of the current accounts at the BOJ fell below ¥ 30 trillion
  2. An aggressive speech by Board member Mizuno who suggested lowering the target to ¥15‾20 trillion to watch its effects
  3. All offices-type bill purchasing operations have increased prominently
  4. Frequent undersubscriptions have been caused partly by the government's cash management movement
  5. The Outlook for this week's Tokyo Money Market

May 30, 2005

T「Reserve balance is likely to decline below ¥30 trillion」

  1. On and after June 2, the outstanding balance of current accounts at the BOJ is likely to decline below ¥ 30 trillion
  2. "The Money Market Operations in fiscal 2004" explains the background of the BOJ's decision to allow the reserve balance to fall short of the target
  3. Governors of the BOJ, the BOK and the People's Bank of China had a conference in Seoul
  4. Is Governor Fukui one of members who are reported to have argued for lowering the target in the minutes of the Monetary Policy Meeting?
  5. Five Board members are supporters of the reduction of the target ? Yet, actual lowering of the target is not expected soon
  6. Remarks of three Board members who are opposed to lowering the target
  7. The Outlook for this week's Tokyo Money Market

May 23, 2005

T「BOJ decided to allow the short of the target temporarily」

  1. The Monetary Policy Meeting of the BOJ decided to allow the outstanding balance of current accounts to fall short of the target temporarily
    - Will the shortfall be beyond the extent denoted by "around" ? The BOJ appears to be prepared for shortfalls of a few trillion yen
    - A measure to harmonize the maintenance of the quantitative easing with the reduction of damages to the short-term market
  2. The large influences on the quantitative easing caused by the government's fund management
    - The monetary base absorbed by the Japanese government was ¥ 30.8 trillion, about $294 billion, at the end of April
  3. Will the BOJ again carry out hectic funds-supplying operations as seen in around February ?
  4. The reserve balance may actually decline below ¥ 30 trillion
  5. The Outlook for this week's Tokyo Money Market

May 2, 2005

T「The possibility of changing the policy framework」

  1. The Monetary Policy Meeting on April 28
    - April Outlook for Economic Activity and Prices
    - Increase to 2 negative votes Reference to the possibility of changing the policy framework
    - Suggestions on mild raises of interest rates in its exit policy and thereafter
    - Anxiety about financial system stability was at last dropped from risk elements
    - Review of the quantitative easing: preparation for lowering the reserve target
    - The status quo is expected at the May meeting
    - June is a focal point
  2. The Outlook for the Tokyo Money Market (until May 13)

April 26, 2005

T「Arguments about the effect of quantitative easing」

  1. Although the effect of quantitative easing on the economy has been denied by BOJ-related persons, the current policy will be maintained
  2. The government's "Japan's 21st Century Vision" asks for inflation targeting by the BOJ
  3. The Ministry of Finance wishes to prevent the zero interest rates in its auctions for FBs
  4. The Outlook for the Tokyo Money Market

April 18, 2005

T「Anti-Japanese drives in China and the reserve target」

  1. Due partly to anti-Japanese drives in China the argument over the lowering of the reserve target was postponed
  2. Forecasts of the core CPI by the Policy Board of the BOJ
  3. A paper on the Open Market Operations by the BOJ staff
  4. The Outlook for the Tokyo Money Market

April 4, 2005

T「Tankan: Not good enough to justify the lowering of the reserve target?」

  1. BOJ's March Tankan results: Not good enough to justify the lowering of the reserve target ?
  2. Increase in issues of FBs does not mean a cooperation offered by the MOF to the BOJ
  3. The quantitative easing for the purpose of stable digestion of government bonds after April ?
  4. The Outlook for the Tokyo Money Market

March 28, 2005

T「How to read the BOJ's minutes」

  1. BOJ board member Nakahara said that the current framework for quantitative easing should be maintained
  2. How to read the minutes of the Monetary Policy Meeting: How many members does each of various expressions imply ?
  3. The minutes of the Monetary Policy Meeting in February
  4. The Outlook for the Tokyo Money Market

March 22, 2005

T「The merger of mega banks and the reserve balances at the BOJ」

  1. The merger of mega banks will make the reserve target harder to achieve
  2. Governor Fukui's press conference on March 16
  3. Change in public views on the reserve target
  4. The Outlook for the Tokyo Money Market

March 14, 2005

T「BOJ's reserve target and LDP」

  1. The outstanding amount in the call market increased due to narrowing negative interest rates
  2. An executive member of the Liberal Democratic Party showed a favorable stance to the BOJ
  3. Minister Takenaka's remarks on "BOJ's entire underwriting of short-term government securities"
  4. The increase in the 2-month FBs will lessen slightly the difficulty of maintaining the target for the current account balances in early June
  5. The Outlook for the Tokyo Money Market

March 7, 2005

T「Mr.Fukui started to give a positive appraisal to underbidding」

  1. The maintenance of the reserve target worries the BOJ
  2. Governor Fukui started to give a positive appraisal to underbidding
  3. Is the speech of Mr. Fukui on February 28 the first step for the exit policy ?
  4. The decline of the increase rate in monetary base for February is a good sign for the Japanese economy
  5. Provisory clause ? average balance ? or around ?
  6. The Outlook for the Tokyo Money Market

February 21, 2005

T「A new member of the BOJ's Policy Board」

  1. Professor Nishimura of Tokyo University will be reportedly appointed as a new member of the BOJ's Policy Board
  2. Arguments on the quantitative easing which are remote to the interest of the people
  3. No negative vote was cast at the latest Monetary Policy Meeting
  4. Governor Fukui appears to wish to follow Chairman Greenspan in handling monetary policy like an art
  5. The Outlook for the Tokyo Money Market

February 14, 2005

T「Will the BOJ change the target this week ?」

  1. Will the BOJ change the target at the Monetary Policy Meeting this week ?
  2. Problems in the quantitative easing pointed out in the speech by Board member Suda
  3. The Outlook for the Tokyo Money Market

February 7, 2005

T「Outlook for BOJ's JGB purchasing operations」

  1. The balance of current accounts at the BOJ has become close to the floor of the target range due to underbidding
  2. No increase in the government bond purchasing operations is expected
  3. Is it likely for the BOJ to provide funds at a negative rate in order to maintain the target ?
  4. A review of the mechanism of underbidding
    (The pre-commitment strategy by the BOJ has ironically induced underbidding)
  5. Speeches by the Board members on February 9 and 24 are worth monitoring
  6. The Outlook for the Tokyo Money Market

January 31, 2005

T「The reduction of the target is not monetary tightening」

  1. OECD’s recommendation to the largest central bank in the world ?
  2. Downward revisions by the BOJ’s Board members of their outlook on prices due to the reduction of charges for fixed-line telephone services
  3. The reduction of the target for the balance of current accounts at the BOJ was referred to by 2 members in the Policy Board
  4. The reduction of the target is not monetary tightening
  5. An unusual extension of maturities is in progress in the BOJ’s fund providing operations
  6. The Outlook for the Tokyo Money Market

January 17, 2005

T「Does a change of the BOJ's target affect the Forex rates ?」

  1. Is there a fine tuning of the target for the current account balances ?
  2. Relation with unsterilization : Does a change of the target affect the Forex rates ?
  3. Practical compromise measures such as lowering the floor limit or addition of provisory clauses ?
  4. The Monetary Policy Meeting of the BOJ on January 18‾19: No policy change is expected
  5. The Outlook for the Tokyo Money Market

January 11, 2005

T「Counterfeit banknotes is a distress to the BOJ」

  1. A sharp increase of counterfeit banknotes is a distress to the BOJ
    The zero interest rate may cause a prolongation of the counterfeiting
  2. Underbidding continues in the fund providing operations by the BOJ
  3. The quicker publication of the minutes of the FOMC meeting: How about the BOJ ?
  4. The Outlook for the Tokyo Money Market
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