Bank of Japan

Authored by Scott Minerd, Global CIO, Guggenheim Investments,

The G7 countries’ finance ministers recently ended their two-day meeting in Sendai, Japan, without an agreement on any economic policy issues, including those surrounding the recent sharp appreciation of the yen. The unwillingness of policymakers to address Japan's fervent appeals for exchange rate intervention may inadvertently hasten the implementation of helicopter money by Japan and other industrialized nations.

One of the reasons why the USDJPY tumbled overnight is because of a set of comments by one of the most hawkish BOJ board members, Takehiro Sato, expressed pessimism about the economy and the central bank’s strategy, saying in a speech Thursday that the BOJ won’t be able to reach its 2% inflation target as forecast and negative rates won’t work to boost investment.

At the end of February, shortly after Japan's disastrous attempt to crush the Yen at the expense of a stronger dollar when the BOJ unveiled its first episode of Negative Interest Rates, only for everything to go spectacularly wrong for Kuroda, the world's financial leaders met in Shanghai where the so-called Shanghai Accord took place when in no uncertain terms central bankers around the globe (and especially the Chinese) came down on Janet Yellen like a ton of bricks demanding that the Fed do a "dovish relent", and stop the Fed's monetary tightening talk, ease back on expectations of furth

While it most likely is just the usual Friday (past) midnight trial balloon by the Nikkei, a media outlet that has promptly become the BOJ's mouthpiece (recall a week ago the new owner of the FT reported that Abe would delay his 2017 sales tax increase, only to see the premier backpedal when the reaction in the USDJPY was not quite as desired), moments ago the Japanese publication reported that the Bank of Japan will "likely set aside funds for the first time to prepare for losses on its huge holdings of Japanese government bonds should the central bank end its monetary easing polic

Never before has the Bank of Japan done so much to achieve so little. Even after arranging a record stimulus program and reducing a key interest rate to less than zero, Bloomberg reports that the central bank has failed to boost inflation to its goal of 2 percent. Stocks are trading lower than when Governor Haruhiko Kuroda expanded his package of asset purchases in 2014. Exports are declining. One measure of bank lending is at a 14-year high, though loan growth is slowing compared with a year ago.