BOJ Determined to Hike
ECB 3.50% in the Cards
US Fed Rose Colored Glasses?
BOJ Determined to Hike
Atsushi Mizuno, Bank ofJapan Board Member
A rise in rates is possible even if some indicators are weak?the Bank of Japan is in the early stages of policy normalization?weak consumption wont force the Bank to change the outlook. December 5, 2006
Toshihiko Fukui, Bank of Japan Governor
If the economy and prices develop in line with our medium-term outlook, we will maintain low interest rates and gradually make adjustments to interest rates. We will proceed with rate hikes slowly, which is not to hurt economic expansion but to support sustained growth. At every board meeting, we discuss economic and inflation developments and other various issues. We will continue checking data against our outlook. November 28, 2006
Toshiro Muto, Bank of Japan Deputy Governor
At this point of time, the question tends to be whether it (the rate hike) is going to be in December or not. But we have not specified any timing, including December?It's completely open?We need to make a decision carefully, but once we make up our mind we will act decisively. November 30, 2006
Tadao Noda, Bank of Japan Board Member
If economic and price developments move along our (semi-annual) outlook report, I think we will adjust interest rates slowly by closely monitoring the developments. November 30, 2006
Koji Omi, Japanese Finance Minister
Buoyant performance in the corporate sector should lead to steady improvements in income conditions. I believe, therefore, consumption will strengthen and that Japan will continue its solid recovery led by private demand...Japan is now on a sustainable recovery track. November 29, 2006
The economy is basically continuing to recover, but consumption remains somewhat weak and we need to monitor developments in the US economy as well. December 1, 2006
ECB 3.50% in the Cards
French fiscal officials are still disturbed by EUR/USD over 1.30, but while other EZ policy makers note the excessive nature of the gain, they are significantly less alarmed:
Christine Lagarde, French Trade Minister
At the current level, the euro penalizes exporters from the Euro-zone. French industrial leaders I met in Tokyo last week, who have invested and who export on the basis of the yen at a stable exchange rate (against the euro) are now worried about the development of their activities. December 4, 2006
Jean-Claude Trichet, European Central Bank President
Excess volatility and disorderly movements in the currency market are not welcome. November 30, 2006
Joaquin Almunia, EU Economic and Monetary Affairs Commissioner
The euro's rise generates certain problems for the export sector, but it also serves as a shield against inflation, because it's a way of paying less for oil. There is no reason to be alarmed by the situation. November 29, 2006
Meanwhile, central bankers have left little doubt that a hike is on tap for Thursday, regardless of the euros valuation:
Jose Manuel Gonzalez-Paramo, ECB Executive Board Member
The very high growth of borrowing, sometimes with an increasing share of foreign currency denominated loans, and large current account deficits, in some cases combined with fiscal imbalances, signal worrying trends which require the attention of policymakers? these features may require robust policy action in order to avoid more painful adjustments in the future. November 30, 2006
Axel Weber, ECB Governing Council Member
In the medium to longer term, monetary policy is expansive by any measure and there is more liquidity available than needed for the financing of a sustainable and non-inflationary growth. This by all means, demands a withdrawal of monetary policy stimulation over the medium to longer term. November 29, 2006
Klaus Liebscher, ECB Governing Council Member
Mr. Liebscher commented that the ECB can't be complacent about inflation dangers and warned that analysts had prematurely called an end to inflation on a number of occasions. November 30, 2006
US Fed Rose Colored Glasses?
Fed officials are still focused on inflation and the soft landing scenario:
Ben Bernanke, Federal Reserve Chairman
The deceleration in economic activity currently under way appears to be taking place roughly along the lines envisioned. November 29, 2006
Donald Kohn, Federal Reserve Vice-Chairman
At the last meeting of the FOMC?and in the speech that Ben Bernanke gave earlier this week, we suggested that (the) trend seemed to be shifting and our expectations were for a gradual decrease. But the risks around that expectation are still tilted to the upside. December 4, 2006
Charles Plosser, Federal Reserve Bank of Philadelphia President
I am still worried about inflation; I want to see core inflation come down. We are not seeing that yet. December 4, 2006
We need to remain vigilant and recognize that maintaining the current stance of policy, or even firming further, may be in the best interests of the economys long-run performance. November 29, 2006
Michael Moskow, Federal Reserve Bank of Chicago President
Recent price data have been consistent with some easing in inflation but additional interest rate hikes may yet be necessary to contain inflationary pressure. December 4, 2006
Noted that the economy is still solid, despite the weak Chicago PMI and ISM manufacturing indices. Mr. Moskow said that he doesn't expect spillover from weak housing and auto sales data, and he does not expect the rest of the economy to be significantly impacted. December 4, 2006
