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Policy gap: BOJ stays loose, PBOC tightens

Thursday, March 16, 2017 - 01:35

The Bank of Japan keeps policy steady as the Fed sticks to its rate-hike path but China follows the Fed by lifting short-term rates to steady the yuan. Sara Hemrajani reports.

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The Fed may be tightening but the Bank of Japan is keeping things loose. It's sticking to its ultra-easy policy, holding steady on rates. (Soundbite) Haruhiko Kuroda, Bank of Japan Governor, saying (Japanese): "We will proceed with powerful monetary easing under our current framework in order to achieve our target of 2 percent inflation as soon as possible." Even though Japan's economy is improving, Kuroda says the pace isn't fast enough to shift away from stimulus. Analysts also point to currency competition in the battle for exports. (Soundbite) Jasper Lawler, Senior Market Analyst, London Capital Group, saying (English): "Obviously we saw a drop in the U.S. dollar after this Federal Reserve decision, that's not really what the Bank of Japan wants to see, they want to see - generally - a softer yen. So if this dollar correction continues the yen necessarily is going to increase, that potentially can be a problem for the Bank of Japan down the road." China, however, is taking its cues from Janet Yellen implementing a modest increase in borrowing costs. The yuan is a constant concern but domestic factors are weighing on the People's Bank. (Soundbite) Jasper Lawler, Senior Market Analyst, London Capital Group, saying (English): "There are a couple of bubble-like conditions in China which creep up every now and then, notably the housing sector and they need to cool that off." Interest rates, inflation and monetary easing all likely to be talking points when central bank chiefs and finance ministers meet at the G20 summit in Germany this weekend.

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Policy gap: BOJ stays loose, PBOC tightens

Thursday, March 16, 2017 - 01:35