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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/sep/21/bank-of-japan-stimulus-programme-federal-reserve-business-live
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| Markets rise after Bank of Japan shakes up stimulus programme – business live | |
| (35 minutes later) | |
| 10.49am BST | |
| 10:49 | |
| OECD u-turns on Brexit...and cuts global growth forecasts | |
| Speaking of Brexit...The west’s leading economic thinktank has backtracked on its warning that the UK would suffer instant damage if the public voted to leave the European Union. | |
| In a new report, the OECD has thrown its weight behind plans by Theresa May to provide fresh post-referendum support to growth in November’s autumn statement. | |
| Our economics editor, Larry Elliott, reports: | |
| Until recently a staunch supporter of George Osborne’s austerity plan, the OECD said it was appropriate for the new chancellor, Philip Hammond, to increase public spending in his first major policy statement later this year. | |
| The thinktank said it was still predicting a sharp slowdown in the economy, but that this would not happen until 2017. It said that the expected negative effects on the rest of the global economy of Brexit – compared in June to the equivalent of a hard landing for China – had also been delayed. | |
| The OECD now expects the UK to grow by 1.8% this year, a small increase on its old forecast. But this will fall to 1% in 2017, they fear. | |
| The OECD also cut its growth forecasts for the global economy; world GDP is now expected to rise by 3.2% in 2017, down from the 3.3% previously. | |
| 10.41am BST | |
| 10:41 | |
| 10.37am BST | |
| 10:37 | |
| Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), fears that Britain’s public finances will deteriorate in the months ahead: | |
| “Although government borrowing fell in August, it was by less than many had expected. | |
| “If the UK economy slows as we expect, cutting the deficit is likely to become increasingly problematic as materially weaker growth will make it more difficult to generate tax revenue. | |
| 10.22am BST | |
| 10:22 | |
| ONS chief economist Joe Grice says today’s data confirms that Britain hasn’t suffered a severe Brexit shock. | |
| “As the available information grows, the referendum result appears, so far, not to have had a major effect on the UK economy. | |
| So it hasn’t fallen at the first fence but longer-term effects remain to be seen.” | |
| Of course, Britain hasn’t even triggered Article 50 yet -- and no-one knows what kind of Soft Brexit, or Hard Brexit, we will end up with. | |
| 10.05am BST | 10.05am BST |
| 10:05 | 10:05 |
| UK deficit reduction plan 'still off course' | UK deficit reduction plan 'still off course' |
| The 8% improvement in August’s UK public finances isn’t enough to get the British government’s deficit reduction plan back on track. | The 8% improvement in August’s UK public finances isn’t enough to get the British government’s deficit reduction plan back on track. |
| So says Howard Archer, economist at IHS Global Insight. He’s encouraged that there’s no sign of a Brexit-induced meltdown, but fears the economy will slow in 2017 as negotiations with the European Union intensify. | So says Howard Archer, economist at IHS Global Insight. He’s encouraged that there’s no sign of a Brexit-induced meltdown, but fears the economy will slow in 2017 as negotiations with the European Union intensify. |
| Here’s his snap take: | Here’s his snap take: |
| Updated | Updated |
| at 10.05am BST | at 10.05am BST |
| 9.43am BST | 9.43am BST |
| 09:43 | 09:43 |
| UK public finances show bigger deficit than expected | UK public finances show bigger deficit than expected |
| Newsflash from London: Britain’s monthly deficit shrank by 8% in August, despite the shock of June’s EU referendum. | Newsflash from London: Britain’s monthly deficit shrank by 8% in August, despite the shock of June’s EU referendum. |
| The Office for National Statistics reports that the UK borrowed £10.546bn to balance the books last month, down from £11.47bn in August 2015 [that excludes the impact of our stakes in Royal Bank of Scotland and Lloyds Banking Group]. | The Office for National Statistics reports that the UK borrowed £10.546bn to balance the books last month, down from £11.47bn in August 2015 [that excludes the impact of our stakes in Royal Bank of Scotland and Lloyds Banking Group]. |
| However, that’s more than expected - the City had forecast a monthly deficit of £10.0bn. So the government may still be struggling to hit this year’s borrowing target: | However, that’s more than expected - the City had forecast a monthly deficit of £10.0bn. So the government may still be struggling to hit this year’s borrowing target: |
| Importantly, the ONS says there are no clear signs of any impact on the public finances, following the Brexit vote. | Importantly, the ONS says there are no clear signs of any impact on the public finances, following the Brexit vote. |
| They report that income tax receipts were strong in August, but VAT receipts grew at their slowest pace since March 2015. | They report that income tax receipts were strong in August, but VAT receipts grew at their slowest pace since March 2015. |
| More to follow.... | More to follow.... |
| 9.20am BST | 9.20am BST |
| 09:20 | 09:20 |
| Bloomberg’s Jonathan Ferro smells a rat.... | Bloomberg’s Jonathan Ferro smells a rat.... |
| "So we are clearly running out of stuff to buy but let's call it 'yield curve control' and hope nobody will notice" | "So we are clearly running out of stuff to buy but let's call it 'yield curve control' and hope nobody will notice" |
| 9.18am BST | 9.18am BST |
| 09:18 | 09:18 |
| Oh dear... the early yen selloff has faded: | Oh dear... the early yen selloff has faded: |
| Yen back to flat as drinks run out at BOJ party pic.twitter.com/WSQZ7K98g7 | Yen back to flat as drinks run out at BOJ party pic.twitter.com/WSQZ7K98g7 |
| 9.12am BST | 9.12am BST |
| 09:12 | 09:12 |
| Kuroda: We won't hesitate to do more | Kuroda: We won't hesitate to do more |
| Bank of Japan governor Haruhiko Kuroda has put down the jam knife, and faced the press to explain the new stimulus measures agreed today. | Bank of Japan governor Haruhiko Kuroda has put down the jam knife, and faced the press to explain the new stimulus measures agreed today. |
| He insists that the BoJ could launch more stimulus measures, if needed, including cutting interest rates deeper into negative. | He insists that the BoJ could launch more stimulus measures, if needed, including cutting interest rates deeper into negative. |
| Kuroda says: | Kuroda says: |
| “We won’t hesitate to adjust monetary policy with an eye on economic and price developments. “We will ease further when necessary. We can cut short-term rates, lower the long-term rate target, buy more assets or if conditions warrant, accelerate the pace of expansion in monetary base. | “We won’t hesitate to adjust monetary policy with an eye on economic and price developments. “We will ease further when necessary. We can cut short-term rates, lower the long-term rate target, buy more assets or if conditions warrant, accelerate the pace of expansion in monetary base. |
| There’s room to ease further with the three dimensions of quantity and quality of assets as well as interest rates.” | There’s room to ease further with the three dimensions of quantity and quality of assets as well as interest rates.” |
| Kuroda also conceded that his stimulus package hasn’t yet delivered the goods, since it was launched in 2013. | Kuroda also conceded that his stimulus package hasn’t yet delivered the goods, since it was launched in 2013. |
| “It’s true that more than three years have passed. But there’s absolutely no change to our commitment to achieve 2 percent (inflation) at the earliest date possible. | “It’s true that more than three years have passed. But there’s absolutely no change to our commitment to achieve 2 percent (inflation) at the earliest date possible. |
| And he also claimed that the BoJ will be able to manage the ‘yield curve’ (which tracks the interest rate on shorter and longer-dated bonds) | And he also claimed that the BoJ will be able to manage the ‘yield curve’ (which tracks the interest rate on shorter and longer-dated bonds) |
| “I won’t say we can fully control long-term rates like the way we control short-term rates. But central banks have already been taking steps to directly influence long-term rates. The BOJ has done so too and clearly has been successful.” | “I won’t say we can fully control long-term rates like the way we control short-term rates. But central banks have already been taking steps to directly influence long-term rates. The BOJ has done so too and clearly has been successful.” |
| (thanks to Reuters for the quotes) | (thanks to Reuters for the quotes) |
| 8.46am BST | 8.46am BST |
| 08:46 | 08:46 |
| Kit Juckes, currency expert at Societe Generale, reckons governor Kuroda has scraped together whatever he could find: | Kit Juckes, currency expert at Societe Generale, reckons governor Kuroda has scraped together whatever he could find: |
| BOJ studiously scrapes jam from bottom of policy jar. JGB yields up small, Nikkei up more, yen weaker cos positions | BOJ studiously scrapes jam from bottom of policy jar. JGB yields up small, Nikkei up more, yen weaker cos positions |
| Some City investors are wondering whether to bet against the central bank... | Some City investors are wondering whether to bet against the central bank... |
| "The BOJ has effectively told markets it has a Royal Flush, and the markets are questioning Kuroda’s poker face” - Aberdeen Asset Management | "The BOJ has effectively told markets it has a Royal Flush, and the markets are questioning Kuroda’s poker face” - Aberdeen Asset Management |
| 8.33am BST | 8.33am BST |
| 08:33 | 08:33 |
| There’s nothing like the smell of more easy money to get bank shares rallying... | There’s nothing like the smell of more easy money to get bank shares rallying... |
| Euro zone bank stocks give initial thumbs up to BOJ's yield curve targeting, now +3.3%, best day in over 2 months pic.twitter.com/LCcxbCGg67 | Euro zone bank stocks give initial thumbs up to BOJ's yield curve targeting, now +3.3%, best day in over 2 months pic.twitter.com/LCcxbCGg67 |
| 8.26am BST | 8.26am BST |
| 08:26 | 08:26 |
| Markets rally after BoJ reboots stimulus | Markets rally after BoJ reboots stimulus |
| European stock markets are rallying in early trading, led by the banking sector. | European stock markets are rallying in early trading, led by the banking sector. |
| The FTSE 100 has jumped by 35 points, or 0.5%, to 6867, as investors give an early thumbs-up to the BoJ’s announcement. | The FTSE 100 has jumped by 35 points, or 0.5%, to 6867, as investors give an early thumbs-up to the BoJ’s announcement. |
| Barclays (+4%) is the top riser in London, with Lloyds Banking Group (+2.5%) and Standard Chartered (2.2%).close behind | Barclays (+4%) is the top riser in London, with Lloyds Banking Group (+2.5%) and Standard Chartered (2.2%).close behind |
| Bank pop! #BOJ helps guide longer-end yields higher...banks rally in Japan & here in Europe pic.twitter.com/5VE3gPiQsV | Bank pop! #BOJ helps guide longer-end yields higher...banks rally in Japan & here in Europe pic.twitter.com/5VE3gPiQsV |
| Germany’s DAX index has jumped by 1%, while the French CAC is up by 1.2%. | Germany’s DAX index has jumped by 1%, while the French CAC is up by 1.2%. |
| That follows the strong trading in Asia, where Japan’s market jumped by 2%. | That follows the strong trading in Asia, where Japan’s market jumped by 2%. |
| Traders are welcoming the new that central banks can still find ways to stimulate their economies (even though we don’t know if it will work. | Traders are welcoming the new that central banks can still find ways to stimulate their economies (even though we don’t know if it will work. |
| Mike van Dulken & Henry Croft at Accendo Markets explain: | Mike van Dulken & Henry Croft at Accendo Markets explain: |
| The positive start comes after a markets welcomed the Bank of Japan (BoJ) leaving its already negative interest rates unchanged overnight and tweaking its existing stimulus programme. | The positive start comes after a markets welcomed the Bank of Japan (BoJ) leaving its already negative interest rates unchanged overnight and tweaking its existing stimulus programme. |
| This buys governor Kuroda some time and leaves the door open for more rate cuts/policy easing which has seen the Yen weaken to the benefit of Nikkei exporters and helped financials rally. | This buys governor Kuroda some time and leaves the door open for more rate cuts/policy easing which has seen the Yen weaken to the benefit of Nikkei exporters and helped financials rally. |
| As expected, the BoJ has offered an interesting policy update for markets to digest and is a good effort at dispelling uncertainty about global central bank’s losing potency and running out of ammo. And while the Fed is unlikely to make any policy change tonight, its message and sure-fire subtle hints certainly could, especially in light of fresh Yen weakness sending the US dollar basket to September highs. | As expected, the BoJ has offered an interesting policy update for markets to digest and is a good effort at dispelling uncertainty about global central bank’s losing potency and running out of ammo. And while the Fed is unlikely to make any policy change tonight, its message and sure-fire subtle hints certainly could, especially in light of fresh Yen weakness sending the US dollar basket to September highs. |
| 8.21am BST | 8.21am BST |
| 08:21 | 08:21 |
| Japan launches QQEYCC | Japan launches QQEYCC |
| Today’s measures are being dubbed “QQEYCC”, or “quantitative and qualitative monetary easing with yield curve control”. | Today’s measures are being dubbed “QQEYCC”, or “quantitative and qualitative monetary easing with yield curve control”. |
| Yield curve control? Well, that’s the new commitment to keep the yield, or interest rates, on Japanese 10-year bonds at zero. | Yield curve control? Well, that’s the new commitment to keep the yield, or interest rates, on Japanese 10-year bonds at zero. |
| Peter Wells of FastFT has done a nice explanation: | Peter Wells of FastFT has done a nice explanation: |
| If there’s one thing we can be sure of, it’s that the Bank of Japan has added to its alphabet ramen of policy terms. | If there’s one thing we can be sure of, it’s that the Bank of Japan has added to its alphabet ramen of policy terms. |
| Markets will now be served a piping hot bowl of “quantitative and qualitative monetary easing with yield curve control”. | Markets will now be served a piping hot bowl of “quantitative and qualitative monetary easing with yield curve control”. |
| Yield curve control… isn’t that part of the auto-pilot function in a Tesla? | Yield curve control… isn’t that part of the auto-pilot function in a Tesla? |
| It may well be, but in the context of the Bank of Japan it means policymakers are making a renewed effort to keep borrowing costs low in an effort to spur growth. | It may well be, but in the context of the Bank of Japan it means policymakers are making a renewed effort to keep borrowing costs low in an effort to spur growth. |
| JGBs weaker after BoJ caps 10-year yield https://t.co/GHddR9QQmY | JGBs weaker after BoJ caps 10-year yield https://t.co/GHddR9QQmY |
| 8.16am BST | 8.16am BST |
| 08:16 | 08:16 |
| BoJ reboots stimulus: What the experts say | BoJ reboots stimulus: What the experts say |
| There’s broad agreement that the Bank of Japan has taken monetary policy into new territory today, despite leaving interest rates on hold. | There’s broad agreement that the Bank of Japan has taken monetary policy into new territory today, despite leaving interest rates on hold. |
| But while some financial experts welcome the changes to the BoJ’s stimulus package, others fear that it won’t work. | But while some financial experts welcome the changes to the BoJ’s stimulus package, others fear that it won’t work. |
| Takashi Miura, banking analyst at Credit Suisse, says the new measure are a “positive surprise”. | Takashi Miura, banking analyst at Credit Suisse, says the new measure are a “positive surprise”. |
| It’s positive for banks. The BOJ did not deepen the negative rate, so there’s no impact on banks’ lending rates. | It’s positive for banks. The BOJ did not deepen the negative rate, so there’s no impact on banks’ lending rates. |
| Furthermore, I think the BOJ’s new target to keep 10-year yields hovering around zero percent means the central bank effectively won’t deepen the negative rate. That is a positive for banks. | Furthermore, I think the BOJ’s new target to keep 10-year yields hovering around zero percent means the central bank effectively won’t deepen the negative rate. That is a positive for banks. |
| Divya Devesh of Standard Chartered says the key news is the BoJ’s new commitment to overshoot the 2percent inflation target: | Divya Devesh of Standard Chartered says the key news is the BoJ’s new commitment to overshoot the 2percent inflation target: |
| That’s committing to continue easing for longer than previously expected. Also hinting that the balance sheet will remain large for a long time. We think that’s dollar/yen positive. Also, markets are a bit relieved given no further cuts to interest rates.” | That’s committing to continue easing for longer than previously expected. Also hinting that the balance sheet will remain large for a long time. We think that’s dollar/yen positive. Also, markets are a bit relieved given no further cuts to interest rates.” |
| However.... Nick Kounis of ABN Amro isn’t convinced that today’s measures go far enough. | However.... Nick Kounis of ABN Amro isn’t convinced that today’s measures go far enough. |
| #BoJ first central bank to essentially raise its inflation target but accompanying stimulus does not make it credible. deflation more likely | #BoJ first central bank to essentially raise its inflation target but accompanying stimulus does not make it credible. deflation more likely |
| This is from Ilya Spivak of DailyFX.com | This is from Ilya Spivak of DailyFX.com |
| Committing to "overshoot" 2% inflation rings hollow if you can't get there in the first place. #BOJ | Committing to "overshoot" 2% inflation rings hollow if you can't get there in the first place. #BOJ |
| Seems to me that hitting one's head against the wall harder than before won't make it any more likely to crack #BOJ | Seems to me that hitting one's head against the wall harder than before won't make it any more likely to crack #BOJ |
| Duncan Weldon of the Resolution Group argues that Tokyo’s government needs to boost spending too: | Duncan Weldon of the Resolution Group argues that Tokyo’s government needs to boost spending too: |
| 1. Feels like a decent effort from BOJ. The inflation overshoot stuff (or rather the "we'll keep easing") commitment important. | 1. Feels like a decent effort from BOJ. The inflation overshoot stuff (or rather the "we'll keep easing") commitment important. |
| 2. That said, further improvement requires fiscal action. Monetary policy/debt management all getting very blurry with yield curve targets. | 2. That said, further improvement requires fiscal action. Monetary policy/debt management all getting very blurry with yield curve targets. |
| 8.01am BST | 8.01am BST |
| 08:01 | 08:01 |
| The Bank of Japan will be pleased to see that the yen is weakening. | The Bank of Japan will be pleased to see that the yen is weakening. |
| The Japanese currency has fallen by 1% against the US dollar, from ¥101 to ¥102. | The Japanese currency has fallen by 1% against the US dollar, from ¥101 to ¥102. |
| Lower is better, if you’re trying to get inflation higher #CurrencyWars | Lower is better, if you’re trying to get inflation higher #CurrencyWars |
| #yen weaker 102.52 #BOJ shifts from pre-set target for expanding #money supply to controlling yields' shape #japan pic.twitter.com/RofGKCqKVq | #yen weaker 102.52 #BOJ shifts from pre-set target for expanding #money supply to controlling yields' shape #japan pic.twitter.com/RofGKCqKVq |
| 7.54am BST | 7.54am BST |
| 07:54 | 07:54 |
| Japanese stocks surge after BoJ announcement | Japanese stocks surge after BoJ announcement |
| The Tokyo stock market has rallied strongly, as investors welcome the Bank of Japan’s new commitment to overshoot its inflation target. | The Tokyo stock market has rallied strongly, as investors welcome the Bank of Japan’s new commitment to overshoot its inflation target. |
| The Nikkei has jumped by almost 2%, or 315 points, while the wider Topix index gained 2.7%. | The Nikkei has jumped by almost 2%, or 315 points, while the wider Topix index gained 2.7%. |
| Bank shares are leading the rally; on relief that the BoJ didn’t slash interest rates deeper into negative territory. | Bank shares are leading the rally; on relief that the BoJ didn’t slash interest rates deeper into negative territory. |
| Nikkei jumps 1.9% to 16807.62 as Yen weakens after BoJ kept neg rate unch at -0.10% BUT adopts QQE w/ yield curve control to prop up banks pic.twitter.com/CIVwvniTxj | Nikkei jumps 1.9% to 16807.62 as Yen weakens after BoJ kept neg rate unch at -0.10% BUT adopts QQE w/ yield curve control to prop up banks pic.twitter.com/CIVwvniTxj |
| Updated | Updated |
| at 7.57am BST | at 7.57am BST |
| 7.41am BST | 7.41am BST |
| 07:41 | 07:41 |
| Introduction: Bank of Japan shakes up stimulus programme | Introduction: Bank of Japan shakes up stimulus programme |
| Good morning. | Good morning. |
| Central bankers have fired a lot of ammunition into the financial system, in the eight years since the crisis blew up. And the Bank of Japan has just shown that they’re not out of firepower yet. | Central bankers have fired a lot of ammunition into the financial system, in the eight years since the crisis blew up. And the Bank of Japan has just shown that they’re not out of firepower yet. |
| The BoJ has rebooted its stimulus programme overnight, announcing a cocktail of new targets and measures. It’s a new bid to drive inflation and growth, and weaken the yen. | The BoJ has rebooted its stimulus programme overnight, announcing a cocktail of new targets and measures. It’s a new bid to drive inflation and growth, and weaken the yen. |
| But it also resisted slashing interest rates; instead, it has adjusted its bond-buying efforts, and reasserted its commitment to getting inflation back to 2%. | But it also resisted slashing interest rates; instead, it has adjusted its bond-buying efforts, and reasserted its commitment to getting inflation back to 2%. |
| At its eagerly awaited policy meeting today, the BoJ: | At its eagerly awaited policy meeting today, the BoJ: |
| It all adds up to another commitment to do “whatever it takes” to drag Japan’s economy out of its ever-lengthening period of weak growth and soggy inflation. | It all adds up to another commitment to do “whatever it takes” to drag Japan’s economy out of its ever-lengthening period of weak growth and soggy inflation. |
| Brave new world: #BOJ "pledged to expand the monetary base until inflation is stable above 2% target" - basically committing to overshoot | Brave new world: #BOJ "pledged to expand the monetary base until inflation is stable above 2% target" - basically committing to overshoot |
| The Financial Times are calling it an “unprecedented new kind of monetary easing”. | The Financial Times are calling it an “unprecedented new kind of monetary easing”. |
| We should hear more from Japanese central bank chief Haruhiko Kuroda shortly. | We should hear more from Japanese central bank chief Haruhiko Kuroda shortly. |
| And it sets the tone for a big day in central banking. At 7pm BST, the US Federal Reserve will announce whether it has taken the plunge and raised interest rates for the first time this year. The markets are expecting the Fed to leave rates on hold, probably until December. But as the BoJ showed today, you never quite know where you are with central banks.... | And it sets the tone for a big day in central banking. At 7pm BST, the US Federal Reserve will announce whether it has taken the plunge and raised interest rates for the first time this year. The markets are expecting the Fed to leave rates on hold, probably until December. But as the BoJ showed today, you never quite know where you are with central banks.... |
| Updated | Updated |
| at 7.49am BST | at 7.49am BST |