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January 16th - According to sources, some Bank of Japan (BOJ) policymakers believe that an earlier-than-expected interest rate hike is possible, with a high probability of an April rate increase, as the continued depreciation of the yen could exacerbate already widening inflationary pressures. BOJ policymakers face the daunting task of pushing up years of persistently low borrowing costs amid increasing global headwinds and economic pressures, just as the Japanese economy is beginning to recover from prolonged deflation. The central bank just raised interest rates to a 30-year high in December and is expected to keep rates unchanged at its January meeting. However, sources say many BOJ policymakers believe there is room for further rate hikes, with some not ruling out action in April, which would be earlier than the mainstream market expectation (i.e., a rate hike in the second half of the year). Sources indicate that if sufficient evidence emerges that Japan will continue to achieve its 2% inflation target, some within the BOJ are not ruling out the possibility of early action.Sources say that some within the Bank of Japan believe that interest rate hikes may come sooner than the market expects.On January 16th, according to the Financial Times, the first sale of Venezuelan crude oil by the United States went to a company whose senior oil trader had made substantial political donations to Trumps re-election campaign and attended a White House meeting last week. John Addison, a senior trader at Vitol, donated approximately $6 million to a political action committee supporting Trumps re-election. Last Friday, he attended a high-level meeting with energy industry executives at the White House along with Ben Marshall, head of Vitols U.S. operations. During the event, Addison promised Trump that Vitol would secure the best possible price for Venezuelan oil for the U.S. Vitol stated that Addisons donation was a personal act and did not represent the companys position. Another global commodities trading giant, Trafigura, also purchased $250 million worth of Venezuelan oil, a fact confirmed by two sources familiar with the matter. According to Open Secrets data, the companys total lobbying expenditure in the U.S. in 2024 and 2025 is estimated at $525,000. A U.S. Department of Energy official stated that Vitol and Trafigura, both among the worlds largest energy traders, were selected because they "have the capability and willingness to quickly complete the initial transactions." The official added, "As sales continue to progress, the Department of Energy will continue to evaluate all available options."On January 16th, it was announced at a press conference jointly held by multiple departments regarding the "Interim Measures for the Management of Recycling and Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles" that my country is about to enter a phase of large-scale retirement of power batteries. According to estimates by relevant research institutions, the annual amount of waste power batteries generated in 2030 will exceed 1 million tons. Wen Xuefeng, Deputy Director of the Solid Waste and Chemicals Department of the Ministry of Ecology and Environment, stated that power batteries contain not only metal resources such as nickel, cobalt, manganese, and lithium, but also toxic and harmful substances such as fluorine compounds. If not properly recycled, they will not only pollute the environment but also waste resources. The newly released management measures clarify requirements such as "integrated vehicle and battery scrapping," strengthening the management of power battery recycling and utilization through legal means, which will effectively regulate the behavior of all participating entities.Japanese Finance Minister Satsuki Katayama expressed concern about the recent yens exchange rate.

The USD/JPY exchange rate reaches 133.50 as the BOJ's summary of viewpoints bolsters the outlook for loose policy

Alina Haynes

Dec 28, 2022 10:59

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After fluctuating around 133.50 during the Asian session, the USD/JPY pair has breached to the upside. The Japanese Yen is volatile due to expectations that the Bank of Japan (BOJ) will retain its ultra-lax monetary policy.

 

The USD Index has maintained a range-bound performance near 103.80 despite the volatility of risk-sensitive assets. The selling pressure on the S&P 500 on Tuesday was caused by weakness in technology companies. In addition, a decline in economic activity, as recorded by the Trade Balance figures of the United States Census Bureau, caused uncertainty to US markets.

 

In November, the US international interest rate gap dropped by $15.5 billion, from $98.8 billion in October to $83.3 billion. The drop in the trade deficit is not attributable to a rise in exports, but rather to a general decline in economic activity. The United States economy has begun to feel the effects of the Federal Reserve's (Fed) decision to boost interest rates to combat inflation.

 

In the interim, the decline in US Durable Goods Orders and household consumption spending has begun to raise red flags regarding the Federal Reserve's aggressive monetary policy. The economists at ING anticipate that the recession will hasten inflation's reduction, allowing the Fed to reduce interest rates by the end of CY2023.

 

Reuters shared the Bank of Japan (BOJ) Summary of Opinions for the most recent monetary policy meeting, which underlined that the central bank must sustain its easy monetary policy because Japan is in a vital phase for achieving its price target. In addition, the economy is exhibiting signs of wage increases, which is a positive economic cycle; yet, it is prudent to maintain a loose monetary policy for the time being.


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