Pain felt by Japanese banks finally wakes up the BoJ
By: Henny Sender
There were plenty of warning signs that the Bank of Japan’s policy of negative interest rates was doomed. The first — and most immediate — sign was a rise in the yen in January, when the policy was introduced. It was both unanticipated and unwanted since a handful of exporters such as Toyota, which benefit from a cheap currency, have been a major source of growth for decades. By April, even the head of the Financial Services Agency, Nobuchika Mori, delicately criticised the BoJ action at a speech at the annual ISDA meeting…. In the US, one reason insurers are so reluctant to criticise the policies of the Federal Reserve, analysts say, is that the insurance industry currently falls under the purview of local state regulators. “They fear above all else coming under the much more critical eye of a national regulator such as the Fed,” says one prominent investor. Meanwhile the plight of their clients, average Americans, continues to worsen, and as they age, their standard of living will drop further. “It is thus now impossible for retirees to ensure quality of life and others to save for secure retirement through the deposit and investment options suitable for and available to low/modest-income households,” argues Karen Petrou, managing partner of Federal Financial Analytics. “Current income-distribution distortions are thus likely only to get worse faster as savings fall into ever deeper holes. Contemplate rising inflation without rising savings returns and be particularly afraid.”
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