Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: UnBelievable who wrote (56665)	7/16/2000 6:40:20 PM
From: UnBelievable	Respond to of 99985

Japan Papers Say BOJ To Delay Rate Hike Decision (This item originally ran on Saturday, June 15) TOKYO (Dow Jones)--Two of Japan's top national newspapers carried front page stories Saturday morning reporting that Bank of Japan policy board members will likely refrain from lifting the zero-rate policy when they meet Monday due to concerns about the fallout from the failure earlier in the week of a major retailer. The reports, based on comments from government sources, said policy board members would cite the need to gauge the impact of Sogo Co.'s (J.SOG or 8243) failure on the economy and financial markets before ending the 17-month-old zero-rate regime. The reports are a reversal from earlier articles in the same newspapers that suggested an interest rate hike was likely. According to Saturday's Mainichi Shimbun, "Because the BOJ has determined that a self-sustaining economic recovery is in sight, it has been moving in the direction of ending the zero-rate policy. However, because financial markets have shown unstable movements following the failure of major department store operator Sogo, it has become necessary to gauge those movements from here" before a rate move can be made. The Mainichi speculated that a rate hike decision would be delayed until August. Previously, August was considered an unlikely time for such a move, as liquidity in Tokyo financial markets dries up during that month due to summer holidays. The Yomiuri Shimbun quoted one BOJ official as saying that a decision to maintain zero rates wouldn't mean the BOJ had caved into political pressure. "Hypothetically, even if the BOJ does hold off from ending zero rates, it won't mean that it yielded to outside pressure," the unnamed source said. The reports came a day after Prime Minister Yoshiro Mori, in a rare public step for a prime minister here, urged the BOJ to maintain current policy. "If rates rise, it would affect everything from stocks to currencies...I hope the BOJ will make a proper judgment," Mori said. The Asahi Shimbun stopped short of reporting that the likelihood of a rate hike has diminished, but the paper did carry a front page story on Mori's comments and another item noting that market sentiment has gradually shifted in favor of those forecasting that rates will remain unchanged. In theory, none of the articles in Saturday's papers was based on comments from members of the nine-member policy board, because the BOJ law prohibits those officials from talking about monetary policy so close ahead of a meeting. But the articles could possibly reflect opinions from some of those officials that were indirectly leaked. If indeed the BOJ stands pat on policy Monday, it would mark a major reversal on policy. BOJ officials have said privately that until the Sogo development muddied the waters, it was almost certain the policy board would lift rates Monday. The BOJ made great efforts over the last few weeks to prepare the markets for the end of zero rates, granting interviews to the media with several members of the policy board in which those officials made comments hinting of an imminent rate hike. The BOJ keeps a tight rein on media access to top officials, so this parade of rate-hike friendly appearances can be considered an orchestrated attempt to send a clear message. Notably, policy dove Nobuyuki Nakahara was not among the officials in the press during this period. In his last public appearance before Monday's meeting, BOJ Governor Masaru Hayami noted that concerns about the financial system - a key factor behind the implementation of zero rates in February 1999 - have eased markedly. He also ended his remarks with a pledge to maintain BOJ transparency and independence. If the policy board votes to maintain zero rates, it's likely that both the central bank's independence and its commitment to transparency will be questioned. -By Brian Fowler, Dow Jones Newswires; 813-5255-2929; brian.fowler@dowjones.com