It is a time of great concern

It is a time of great concern. Not only is the U.S. dollar strengthening, but there are also high interest rates, Japan and China’s response, and the Bank of Korea’s Monetary Policy Committee are mixed with a number of issues. With the outlook for a further rate cut coupled with the recent surge in the exchange rate in January, the Bank of Japan has reported some notable news the previous day. Let’s continue while watching the news.

“Ryozo Himino, vice president of the Bank of Japan (BOJ), hinted at the possibility of a rate hike in January. According to foreign media such as the Nihon Keizai Shimbun and Wall Street Inquiry on the 14th, Deputy Governor of the BOK, said in a speech at the Financial Economic Forum in Yokohama, Kanagawa Prefecture, that if the economic outlook materializes, we will adjust the scale of quantitative easing and raise interest rates.

“Inflation is largely in line with expectations, and we will discuss whether to raise interest rates next week,” he said, stressing that a surprise announcement is not desirable unless it is in a crisis situation. (Omitted)

In particular, several companies have included continuous wage hikes in their mid-term management plans ahead of the spring wage phenomenon, and Deputy Governor Himino noted, “Japan’s economic and price situation is generally progressing to an observation deck.” “We expect a big direction to be presented in the inauguration speech of the U.S. president,” he said, adding, “There are many prospects that the U.S. economy will remain solid.” (Yonhap Infomax, 25. 1.14)

Personally, I was surprised to read this article. Usually, the Bank of Japan tends to give hints about policy about a week ago, and the 24th (Friday) of next week is the day of the BOJ’s financial policy decision meeting. While not raising interest rates in December, Ueda mentioned the need to be cautious about raising interest rates, and he hinted that he would start further raising after checking whether wage hikes are clearly followed. I thought about raising interest rates around March after looking at the data from February to March during the spring period. But… All of a sudden, the deputy governor of the BOJ is saying something that’s going to be a surprise, “Unless it’s a crisis, a surprise announcement is not desirable” in the second paragraph… Yes.. The market’s expectation is that let’s pass in January.. If there’s a rate hike here, you can be quite embarrassed… I think it’s a response to this.

If you look at the third paragraph of the article, it is said that companies will proceed with their wage increase plan as an observation deck ahead of the Spring Festival. As the wage increase plan has been released, the Bank of Japan seems to suggest that it does not have to wait until March to confirm the wage increase mentioned earlier by Governor Ueda. One more… When Japan Raises Interest Rates… If the U.S. cuts interest rates as the U.S. economy falters, the U.S.-Japan interest rate gap will sharply shrink, which could lead to the yen-carry liquidation… At the end of paragraph three, you see that the U.S. economy is likely to remain strong. Yes, the concerns about the U.S. economic downturn in August last year and the resultant Fed rate cut is not the same as the rate hike that’s happening in this situation. And that’s the third paragraph that says that there’s not much concern about the yen carry liquidation that’s going to be caused by the Japanese rate hike. Wow… It’s a bit restless… I’ve been flying around with these articles just four or five days ago, and the atmosphere is changing quite quickly. Now, let’s take a look at the cuckoo article for a moment.

“The Bank of Japan (BOJ) is likely to raise interest rates further at its financial policy-making meeting after January. It is expected to serve as a positive factor for the BOK to consider further rate hikes at its meeting after January, as moves to consider raising wages this spring spread not only by large Japanese companies but also by small and medium-sized local companies.

The BOJ released a report at a meeting of branch managers across the country on the 9th, saying, “There is a widespread perception among companies of a wide range of industries and sizes that there is a need for continuous wage increases.” The meeting was followed by reports that “a significant number of companies are positive for wage increases, and a definite wage increase will be made this spring” and “the possibility of wage increases is higher than before October 2024. Some companies have included continuous wage increases in their mid-term management plans.
The January Sakura Report, Japan’s economic report, also included a number of voices from companies saying, “We have raised wages by 5-6% in 2024 and will continue to raise wages to secure talent in the future,” and “We plan to raise wages by 7% on average in 2025, similar to 2024.” (Newspim, 25. 1.10)

On January 9th, the Bank of Japan held a meeting of branch managers across the country to discuss sustainable wage increases. If you look at the second paragraph… And a lot of companies are saying that they’re positive about pay increases, and this spring they’re going to see a big pay increase, and if you look at the third paragraph, another report from January, 25, is going to show 5 to 6 percent in 24 years… And in the next 25 years, we can expect a 7 percent wage increase. As I mentioned earlier, the realization of the wage increase that Ueda mentioned when he postponed the rate hike in December last year… It is saying that it has been met to a certain level.

With wages rising… The prospect that Japan’s consumer price index will remain at 2% for a longer period than expected is gaining momentum. And the surge in rice prices, the staple food in Japan, is also… It looks like it will have a pretty negative impact on inflation sentiment. Here’s an article.

“The Bank of Japan’s cafeteria in Nihonbashi, Tokyo, recently gave up Japanese rice and began using cheap Taiwanese imported rice. It is a symbolic scene that shows that the expectation of the central bank of Japan that rice prices will calm down after autumn when new rice comes out is completely wrong.” (Chosun Ilbo, 25.1.14)

It’s funny that I can’t eat Japanese rice in the cafeteria of the central bank… They import and serve Taiwanese rice. There were strong concerns in Japan about the rise in rice prices in the second half of last year… At that time, the Bank of Japan was optimistic that rice price growth would stabilize from the fourth quarter… That argument is wrong. The damage was done by the Bank of Japan in its restaurant