...Quantitative and Qualitative Monetary Easing (QQE) Quantitative and Qualitative Easing was introduced on April 4, 2013 in order to achieve the price stability target of 2 percent based on the change in the consumer price index. The concept is similar to Quantitative Easing but instead focusing on both quantity and quality. The current decision of BOJ to proceed a monetary easing 1)The adoption of the monetary base control The Bank of Japan changed its main operating target for money market operations from overnight uncollateralized call rate to the expansion of the monetary base via JGB purchases. The Bank of Japan will conduct money market operations which aims to increase the monetary base at an annual pace of about 80 trillion yen in 2014 and 2015 (an addition of about 10-20 trillion yen compared with the past). 2)An increase in JGB purchases and their maturity extension The average remaining maturity of the bank’s JGB purchases extended more than double, so as to further encourage the decline in long term interest rate. Which the maturity of JGB extend from about less than 3 years to about 7-10 years. The Bank will purchase JGBs so that their amount of outstanding will increase at a pace 80 trillion yen (an addition of about 30 trillion yen compared with the past). 3)An increase in ETF and J-REIT purchases The exchange-traded funds (ETFs) and Japan real estate investment...
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...Japan Navigator No.565 RATES Global Markets Research This is a direct translation of the original Japanese report issued on 11 April and reflects data as of that date. 14 April 2014 Research analysts 1: Near-term market environment and investment strategy JGB curve is unlikely to flatten materially further on US factors alone Next week the focus will be on the 5yr and 20yr JGB auctions. As there will be few other domestic factors, the market will remain susceptible to external factors. However, we do not think US factors alone can bring the risk-off driven flattening further. The key will be whether investors revise down their outlook for economies other than the US based on their view for unexpectedly weak US growth and hawkish Fed, in which case they should reduce risk positions in these markets. This week, risk-off momentum strengthened more than expected. 10yr UST rates have declined to levels signalling that a rate hike, as communicated by the Fed, would be premature, and are also approaching to levels that even reject QE3 tapering. (We note that 10yr rates traded around 2.50% when former Fed Chair Bernanke began talking about a QE exit.) These levels were tested in October 2013, but data do not look as poor as to suggest momentum has slowed to levels equivalent to that period. Even US shares, despite the current adjustment, are trading about 10% higher than in October 2013. We surmise that the issues that the US is currently facing are not cyclical, but rather...
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...The International Bond Market Impact of Unconventional Monetary Policy Yu Zhang 130023326 University of Dundee College of Arts and Social Sciences School of Business April 2014 Content Abstract ................................................................................................................................................... 2 Chapter 1 Introduction .......................................................................................................................... 3 Chapter 2 Literature review.................................................................................................................. 6 Chapter 3 Data and Methodology....................................................................................................... 10 3.1 Data.............................................................................................................................................. 10 3.2 Methodology ............................................................................................................................... 10 Chapter 4 Four Central Banks’ Unconventional Monetary Policy Announcements Details ........ 13 4.1 Important Announcements........................................................................................................ 13 Table 1 Important announcements by the Federal Reserve ............................................................ 13 4.2 Quick Summary: .....................................................
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...Global Macro Research Top of Mind November 13, 2014 Issue 29 Is Europe the Next Japan? From the editor: A slowdown in Euro area growth momentum from an already anemic pace, combined with ongoing concerns about deflation risks, has made comparisons with Japan’s so-called “lost decades” Top of Mind. We ask three experts whether the Euro area is set to repeat Japan’s prolonged period of stagnation and deflation: former BOJ Governor Masaaki Shirakawa (unclear, but Euro area recovery requires addressing the underlying problem of economic integration and not its symptom, deflation), GS Chief European Economist Huw Pill (low growth and even some deflation similar to Japan, in terms of outcome if not in terms of causes, are likely in the short term, but – also akin to Japan – a deflationary spiral is not), and LSE Professor Paul De Grauwe (there is a real risk of this outcome or worse unless policies change). We conclude that Euro area economies and assets could escape Japan’s fate but warn that Euro area stagnation would have a greater impact on the global economy than did Japan’s. Inside Interview with Masaaki Shirakawa Former Governor of the Bank of Japan 4 Headed for Japanese-style deflation? Silvia Ardagna, GS Rates Strategy 6 Interview with Huw Pill GS Chief European Economist 8 Euro area stagnation and its discontents Jose Ursua, GS Global Economics Research 10 Interview with Paul De Grauwe Professor, London School of Economics ...
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...The Rise (and Fall) of the Japanese Yen Lawrence Cifarelli III, Nazanin Ershad, Natthima Sonsoem, Anyesha Mahaptra University of New Haven Abstract This Case study provides an insight to the fluctuations experienced in the currency of Japan, Yen from the late 1990’s to recent years. Japan follows the floating currency monetary policy due to which there is no measures taken on to control the fluctuations. Japan experienced magnificent growth through the 60's, 70's, and 80's leading into the 90's beginning. In the late 1990's, Japan’s economy marked its growth significantly slower, which had then come to be known as the 'lost decade' due to Japanese Asset Price bubble that collapsed. Eventually the nation faced major issues regarding environmental disasters, hollowing out of industries, etc. The past events which have caused the rise and downfall of Japanese Yen has been illustrated for examining the causes of the appreciation and depreciation of this currency. The influence of this floating currency on Japan's economy has been depicted in this case study. This paper also provides some applications of the measures that can maintain the stability of the Japanese Yen. Japan experienced tremendous growth throughout the 1960s, 1970s, and 1980s leading into the leading into the early 1990s. After World War II, Japan underwent a period of restoration followed by the events in 1978 where Japan excelled as a manufacturer partnering with the United States which helped to make its...
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