Apr 28, 2016

Business bites: Bank of Japan … budget plan … hush, squawking clan …

International reserve banks set to move. And other business tidbits of the day.

Ladies and gentlemen, the Bank of Japan … All eyes in global markets are now on the Bank of Japan’s meeting and monetary policy decision this afternoon after the US Federal Reserve and the Reserve Bank of New Zealand left their key interest rates unchanged this morning. The decisions, though, were made from different ends of the decision-making spectrum: the Fed is looking at an increase, the RBNZ at another cut. Both are waiting, watching, to see what happens globally and in their respective economies — with the biggest bar to moves probably the June 23 vote by the UK on leaving the EU and the possible instability a “leave” vote might trigger globally. Both banks didn’t mention the vote, but in the markets it is now the major factor to be confronted in coming months. Before then, though, the Bank of Japan is forecast to make some significant policy changes today to try and offset the damage done by the January 29 move to a partial negative interest regime, which has completely destabilised Japanese financial markets, politics and the economy; the yen is up 8%, the Tokyo market is down 11% since January 29. It was supposed to be the other way. Now markets are looking for the central bank to pay Japanese banks to borrow money and perhaps make other changes to try and reverse the damage done. In NZ, the Reserve Bank has a similar stance to Australia, with record-low rates that could be cut even further if the economy looks like stalling. Next Tuesday’s RBA board meeting will be the big test here. — Glenn Dyer


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2 thoughts on “Business bites: Bank of Japan … budget plan … hush, squawking clan …

  1. Dog's Breakfast

    Why do rate cuts always LOOM?

    I wish our professional journalists, paid to write, I don’t know, use another word. there must be another one somewhere. Not having a go at Crikey here, they correctly record that yesterday’s papers referred to rate cuts ‘looming’.

  2. Norman Hanscombe

    If it’s what appears in Crikey, it’s not primarily about loom per se, but rather the doom which will surely loom if the Crikey Commissariat ever succeed in having the sorts of politicians they favour in charge of our Parliaments.

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