This time two big news from Asia.
China is reportedly seeking to "mobilize" $278 billion of funds to support a fund aimed at stabilizing stock prices. The funds are to come mainly from the offshore accounts of Chinese state-owned enterprises. The market is not entirely convinced and the Hang Seng index only rebounds by about 2.6%. It had previously fallen 12.2% this year. See Figure 1.
At the other end, we have Japanese shares which are already 9.1% up this year. The Bank of Japan held its meeting today and, as expected, it left interest rates unchanged. This was a pretext for a slight strengthening of the yen and a simultaneous decline in the Nikkei225 immediately after the announcement.
Below are the latest BoJ forecasts (the medians of the Policy Board members' forecasts):
Core CPI 2024 (all item less fresh food and energy): 1,9% (forecast made in Oct-2023: 1,9%)
CPI less fresh food 2024: 2,4% (forecast made in Oct-2023: 2,8%)
GDP 2024: 1,2% (forecast made in Oct-2023: 1,0%).
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Core CPI 2025 (all item less fresh food and energy): 1,9% (forecast made in Oct-2023: 1,9%)
CPI less fresh food 2025: 1,8% (forecast made in Oct-2023: 1,7%)
GDP 2025: 1,0% (forecast made in Oct-2023: 1,0%).
So a little bit of lower inflation with higher GDP growth in 2024. Sounds perfect.
Below is an excerpt from the just-published Outlook for Economic Activity and Prices on future conduct of monetary policy:
“(…) the Bank will patiently continue with monetary easing while nimbly responding to developments in economic activity and prices as well as financial conditions. (…) The Bank will continue with QQE with Yield Curve Control, aiming to achieve the price stability target, as long as it is necessary for maintaining that target in a stable manner. It will continue expanding the monetary base until the year-on-year rate of increase in the observed CPI (all items less fresh food) exceeds 2 percent and stays above the target in a stable manner.”
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