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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (22776)	12/2/2004 5:53:49 PM
From: NOW	Respond to of 110194

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To: Wyätt Gwyön who wrote (22776)	12/3/2004 8:50:35 AM
From: russwinter	Respond to of 110194

"Hawk" emerges at BOJ. Mizuno Says BOJ Zero-Rate Policy Beating Deflation (Update3) Listen Dec. 3 (Bloomberg) -- The Bank of Japan's zero-rate policy is overcoming deflation and the bank must look at potential side effects of maintaining its stance, said Atsushi Mizuno, a new Bank of Japan policy maker. ``Almost four years have passed since the central bank introduced its quantitative easing policy as an emergency measure, and the policy has already achieved its initial goal,'' Mizuno, 45, told reporters today at the central bank in Tokyo. ``It has stabilized the financial system and averted a deflationary spiral'' and the bank's goal is being met ``to some extent.'' The bank has pumped extra cash into the world's second- largest economy and kept interest rates at almost zero since March 2001 to fight deflation. It has vowed to maintain the policy until core consumer prices, which exclude fresh food, stop falling at least for a few months and most bank policy makers are certain they won't fall again. Core prices haven't risen since April 1998. Mizuno, formerly chief strategist at Credit Suisse First Boston Securities (Japan) Ltd., joined the central bank's policy board today, succeeding Teizo Taya, whose five-year term expired yesterday. Mizuno said he closely watches job and income indicators such as the job-to-applicants ratio, bonuses and overtime hours to judge the timing for policy change. Policy Change Mizuno today said there is currently no volatility in financial markets, which could lead to large fluctuations. He said maintaining current monetary policy for a long time might push yields on corporate and government bonds too low and cause volatile moves when in the future the bank shifts its policy. Basically, the bank should stick to its self-imposed conditions for changing policy, though bond markets ``would respond calmly'' if the bank gives ``thorough explanations'' of any changes, he said. Late in October, Mizuno predicted the central bank would change its policy of pumping cash into the economy as early as the second quarter of next year, the earliest date among 16 economists surveyed by Bloomberg News. He also said he expects the bank to raise interest rates from close to zero in the third quarter of next year. Mizuno also predicted core prices will rise 0.2 percent next fiscal year starting April 1 and that the world's second largest economy will grow 2.5 percent. The central bank's policy makers in October forecast core prices will rise 0.1 percent and the economy will expand 2.5 percent. ``There's little doubt his appointment to the board will modestly shift the power balance in a hawkish direction,'' Takehiro Sato, an economist at Morgan Stanley Japan Ltd., said in a report sent to clients. Among overseas economies Mizuno said he's most closely watching the euro region. The European Central Bank has more difficulty implementing policy than the Bank of Japan because it must help spur economic growth as well as attempt to prevent inflation, he said.