BOJ Rates on Hold
BOE Finger on the Trigger
ECB Tightening in 2007
PBOC Shaky Compromise?
BOJ Rates on Hold
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Toshihiko Fukui, Bank of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Japan Governor
Reiterated that data will be monitored with no preconception on the timing of the next rate move, but the bank remains forward-looking in its approach. Additionally, Mr. Fukui noted that economic expansion is moving largely in line with the BOJ view, but conceded that CPI and consumption is somewhat weak. December 19, 2006
Bank of Japans Monthly Report
Japan's economy is expanding moderately?and is expected to continue expanding moderately?The year-on-year rate of change in consumer prices is projected to continue to follow a positive trend, as the output gap continues to be positive. December 19, 2006
Mr. Fukuis view will likely come as a welcome surprise to fiscal officials:
Hiroko Ota, Japanese Economics Minister
We would like the BOJ to support the economy on the financial front based on the Tankan and recent economic conditions. December 15, 2006
Hiroshi Watanabe, Japanese Vice Finance Minister
I think the Japanese economy is consolidating. I don't think it is deteriorating right now. Having said that, exchange rates are determined by the relative evaluation (of economies) and it's up to market players to decide. December 14, 2006
BOE Finger on the Trigger
John Gieve, Bank of England Deputy Governor
I do not know a central banker who is not surprised at the faith that markets appear to have in us to keep the great stability going. And the risks in the wider environment are as great as ever. It is not clear to me that these risks are fully priced into the market. Market forces may not have been able to correct any excess optimism given the incentives and constraints of participants operating in a world with a good deal of opaqueness about risk taking. December 14, 2006
Paul Tucker, Bank of England Monetary Policy Committee Member
I concluded that it was essential for the Monetary Policy Committee to act in a way that was most likely to keep inflation expectations anchored. With headline inflation tangibly above target in the run up to the main, New Year wage bargaining season and with the market clearly expecting that policy would be tightened, a small increase in bank rate was, on balance, warranted to avoid any misperception that our reaction function had altered. December 12, 2006
Andrew Sentence, Bank of England Monetary Policy Committee Member
We do see a temporary increase in inflation, but we do see that coming down to around 2% in the second half of next year and that reflects rising energy and import prices?Some of the energy costs have been absorbed by some manufacturers and some of that has been passed on to the consumer. December 14, 2006
ECB Tightening in 2007
The ECB continued to talk up how accommodative monetary policy remains following the central banks December hike to 3.50%:
Juergen Stark, European Central Bank Executive Board Member
Despite the increase in interest rates last week, the monetary policy is accommodative ... interest rates are low ... liquidity is still ample. December 15, 2006
Axel Weber, European Central Bank Governing Council Member
ECB must remain ready to act and inflation risks are clear?Even after the rate increase of last Thursday, monetary policy in the euro region can still be regarded as accommodative, rates are still at a low level. December 13, 2006
Yves Mersch, European Central Bank Governing Council Member
The European Central Bank's interest rates are still low. December 13, 2006
Nicholas Garganas, European Central Bank Governing Council Member
The ECB is monitoring developments and if there are indications that the inflation risks are rising, it will act promptly?.As President Trichet has said, we have not pre-decided on further moves as regards interest rates. December 14, 2006
Erkki Liikanen, European Central Bank Governing Council Member
Monetary policy in the euro area continues to be accommodative, money and credit growth strong and liquidity in the euro area ample by all plausible measures. The governing council of the ECB will monitor very closely all developments so that risks to price stability over the medium term do not materialize. December 14, 2006
PBOC Shaky Compromise?
<?xml:namespace prefix = v ns = "urn:schemas-microsoft-com:vml" />
US officials keep pushing for more aggressive policy change in China:
Ben Bernanke, US Federal Reserve Chairman
If fluctuations in the value of the yuan remain limited within a narrow range, permitting substantial capital mobility would almost entirely eliminate the PBOCs capacity to use monetary policy to stabilize the domestic economy, as any excess of Chinese over dollar interest rates, for example, would trigger large capital inflows. December 15, 2006
Henry Paulson, US Treasury Secretary
In order to reach balanced growth, it is important that the (Chinese) government have full use of all these policy tools, including monetary policy, which would be more effective under a regime where currency values are determined in a competitive, open marketplace based upon economic fundamentals. We believe that China should move toward such a system over the next several years. And of course you understand our strong view that in the meantime more currency flexibility is necessary. December 14, 2006
While Chinese officials express their intent to allow greater yuan flexibility, they are clearly starting to find the US intrusive:
Fan Gang, Peoples Bank of China Monetary Policy Committee Member
A modest yuan appreciation will not only prevent big fluctuations in the economy but also help to crack down on speculative funds. I agree with China's current exchange rate level and the modest appreciation under a managed floating mechanism. December 15, 2006
Wu Yi, Chinese Vice Premier
China will continue to reform its interest rate and exchange rate based on market principles. December 14, 2006
China has the genuine feeling that some American friends are not only having limited knowledge of, but harboring much misunderstanding about, the reality in China. This is not conducive to the sound development of our bilateral relations. December 14, 2006
