inflation japan yen

‘It Can’t Be Helped’: Japanese Inflation Refuses To Rise Despite Bajillions In Money Printing

"The BOJ has done what it can with monetary policy. It can’t be helped."

So everyone knows that when it comes to normalizing policy, the BoJ and its fearless leader Haruhiko Kuroda, are hopelessly behind.

If you want to know how far behind, look no further than the hilarious minutes from the BoJ’s June 15-16 meeting which included the following highly amusing pearls of wisdom:

  • Bank of Japan board members discussed “recent growing interest in the so-called exit” from its current monetary policy framework at its June 15-16 meeting, minutes showed.
  • Some members said it was important for BOJ to “thoroughly explain and gain better understanding” of its thinking on policies, including impact of monetary policy on the BOJ’s financial situation
  • A few members noted BOJ still had “a long way to go” before reaching its 2% price target, so “communicating uncertain information at too early a stage could cause confusion in the market” and “thus, at this point, it was important to thoroughly carry forward research and analysis within” the central bank
  • One member said issue of specific timing of exit “could not be foreseen”

So let’s just take each one of those in turn:

  1. they didn’t talk about an exit strategy, but they did talk about other people talking about an exit
  2. they think the idea of an “exit” is about as dubious as Donald Trump thinks federal judges are (“so-called”)
  3. they’re taking a “better to remain silent and be thought a fool than to speak and to remove all doubt,” approach when it comes to communicating with the public
  4. at least one member says an exit simply “cannot be foreseen”

As far as the ETF buying is concerned, Kuroda offered the following after the BoJ’s July meeting (which of course brought no policy change but did push back the timing on an inflation goal they’ll never hit):

[I] won’t speak at company shareholder meetings.

The reason he needed to say that is because at the current rate, he’ll end up owning a substantial percentage of certain companies’ shares, including (notably) the entire free-float of Fast Retailing within 36 months:


All of this in pursuit of an ever-elusive inflation target.

Well speaking of elusive inflation, we just got the latest CPI numbers from Japan and although they weren’t terrible by Japan’s standards, they were still laughable.

Here’s the breakdown:

  • Japan June Core Consumer Prices Rise 0.4% Y/y; Est. +0.4%


  • June CPI excluding energy, fresh food unchanged y/y; est. -0.1%

  • June overall CPI +0.4% y/y; est. +0.4%
  • Tokyo July core CPI which excludes fresh food +0.2% y/y; est. +0.1%
  • Tokyo July CPI excluding energy, fresh food -0.1% y/y; est. -0.1%
  • Tokyo July overall CPI +0.1% y/y; est. +0.1%

There was also retail sales data:

  • Japan June Retail Sales Rise 0.2% M/m; Est. +0.4%
  • Sales rise 2.1% y/y; est. +2.4%.
  • Unadjusted retail sales at 11.57t yen ($104.1b)
  • Dept. store, supermarket sales rise 0.2% y/y; est. -0.1%

And household spending (a notable print):

  • Household spending +2.3 percent from a year ago (estimate +0.5 percent),

And finally, jobs:

  • Japan June Unemployment Rate at 2.8%; Est. 3%
  • Compared to 3.1% in May, says government statistics bureau.
  • Labor force participation rate at 61% vs 60.8% in May
  • Number employed increases 120K
  • Number unemployed decreases 160K
  • Job-to-applicant ratio at 1.51 vs 1.49 in May
  • New jobs-to-applicants ratio at 2.25 vs 2.31 in May

“The economy is headed for a sixth-straight quarter of expansion and the labor market is the tightest in decades, but inflation is failing to accelerate toward a healthy 2 percent,” Bloomberg writes, summarizing the apparent quandary, before adding that “retail sales and household spending add to the mixed signals, rising even as CPI struggles to gain momentum.”

Here are some fun takes from economists which underscore the extent to which the country has resigned itself to its deflationary fate:

  • “Prices are slow to pick up and I wonder whether core CPI will reach 1 percent or not toward the end of this year,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
  • “Wages are not rising much when you think about how tight the labor market is,” he said. “The BOJ has done what it can with monetary policy. It can’t be helped.”

Yes, “the BoJ has done what it can” and at this point, disinflation “can’t be helped.”

And just for shits and giggles, we also got the summary of opinions from the BoJ’s July 19 and 20 meeting around a half hour ago. Here’s a bullet point summary of those:

  • One said target level of 10-year bond yields of around zero “shouldn’t be interpreted too strictly”
  • One member said would be appropriate to set new annual JGB target of about 45t yen and then reduce the pace of purchases in an “orderly and incremental manner”
  • One member said desirable to have “in-depth discussion” about appropriateness of continuing ETF purchases around 6t yen annually
  • One person said inflation outlook will remain “considerably below 2%” during projection period through fiscal 2019 and even thereafter meeting target wouldn’t “be in sight”

As always, remember what Kuroda said back in the summer of 2015:

The moment you doubt whether you can fly, you cease forever to be able to do it.

Yes, what we need is a positive attitude and conviction.

4 comments on “‘It Can’t Be Helped’: Japanese Inflation Refuses To Rise Despite Bajillions In Money Printing

  1. ptaffet says:

    Uh oh. That last member doubted this pig can fly…no matter how much lipstick Kuroda applies.

  2. Spunky McGregor says:

    ‘Well, it’s raining somewhere. Just not where I want it to.’

    ~God (probably)

  3. Anonymous says:

    I think the world needs a stern warning that growth and organic wealth creation are definitely not the same thing, and that metrics that speak to substantive improvement of the human condition are desperately needed. Inflation targeting? IS that all we can do?

  4. Curt A Tyner says:

    and I thought our central bank was batsh*t crazy…….

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