Japan's imports rose the most in almost a decade in February and land prices increased in the three biggest cities for the first time since 1990, as the economy headed for its longest post-World War II expansion...
Japan's economy grew at an annualized 5.4 percent in the fourth quarter, faster than both the U.S. and Europe, supporting earnings at global companies including Hermes International SCA. An end to seven years of deflation in the world's second-largest economy may prompt the central bank to end its zero-interest- rate policy as soon as this year.
"Domestic demand is incredibly resilient now,'' said Azusa Kato, an economist at BNP Paribas Securities Ltd. in Tokyo. "With consumers set to increase spending now that deflation concerns are fading, the Bank of Japan may raise rates by 25 basis points as soon as October.''
That's a distance down the road, but at least one member of the policy board is indicating that policy is already reversing too quickly. From Reuters:
The Bank of Japan is unlikely to need to tighten credit soon and should instead watch for renewed deflation, a member of its board said on Thursday in the most dovish call yet from within the central bank.
Shin Nakahara said the BOJ should have waited to confirm that years of falling prices had ended before it scrapped its ultra-easy monetary policy on March 9, distancing himself from the rest of the Bank of Japan's nine-person board.
"Consumer prices have turned positive on a year-on-year basis but the rises until December were extremely small, and rather than making a decision on the rise in January alone, we needed to take more time in evaluating whether prices were completely in an uptrend," Nakahara said.
As for what the inflation objective should be, Nakahara identified himself -- but not others -- as a proponent of the upper half the BoJ's recently announced reference zone:
He said a desirable rate of inflation was about 1-2 percent -- compared with an annual core consumer price inflation rate of 0.5 percent in January and 0.1 percent in the preceding two months, which followed seven years of near non-stop decline.
The BOJ board has defined stable prices as an inflation rate of 0 to 2 percent, but Nakahara said that did not necessarily mean the BOJ would not raise rates until annual CPI inflation rose to 1 or 2 percent.
Will Nakahara's views gain traction? Only, it seems, if he finds a disciple to carry on:
The remarks underscored the view that Nakahara was the sole dissenter in the BOJ's decision to end its five-year-old policy and that he would likely oppose rises in the near future in short-term interest rates from present levels near zero, although his term expires in June.