Aurelia Butler

TOKYO (Reuters) – The Bank of Japan managed to calm investor nerves during global market turmoil this week by reversing a calibrated strategy to communicate steady interest-rate rises, but the flip-flop tests the bank’s resolve to phase out decades of radical stimulus.If the central bank, scarred by missteps and reversals going back a quarter century, is at the mercy of markets, it may be constrained in moving away from what it has called excessive support for the world’s fourth-biggest economy.The yen spiked and Tokyo shares plummeted last week as the BOJ unexpectedly raised its policy rate from essentially zero to the highest in 15 years and Governor Kazuo Ueda signalled further steady rate hikes, a path the central bank had been trying to suggest for months.Ueda’s influential deputy helped stabilise sentiment on Wednesday by saying the BOJ would not raise rates when markets were unstable, but confusion resumed on Thursday, when a summary of the discussion at the bank’s July 30-31 meeting showed policymakers focussed on a series of rate hikes to keep inflation from overshooting.”The BOJ hiked interest rates because it didn’t like the weak yen. Now it appears to be suggesting a pause in rate hikes because it doesn’t like stocks falling,” said Takuya Kanda, an analyst at Gaitame.com Research Institute. “If the BOJ is watching markets so much in setting policy, there’s a chance it won’t be able to raise rates that much.”The Japanese currency skyrocketed on Monday and the Nikkei stock average plunged the most since 1987 after the BOJ raised its short-term policy target to 0.25% from a zero-to-0.1% range, followed by Ueda’s hawkish comments. Investors were also rattled by signs the Federal Reserve would soon cut rates to buoy a slowing U.S. economy.BOJ Deputy Governor Shinichi Uchida said on Wednesday the rout was cause for pause, as it might affect the bank’s inflation projections and rate trajectory.”As we’re seeing sharp volatility in domestic and overseas financial markets, it’s necessary to maintain current levels of monetary easing for the time being,” he said, adding that Japan could afford to wait on hikes as inflation remained moderate.While steadying markets, Uchida’s about-face “also ended up magnifying market swings”, said Kazutaka Maeda, an economist at Meiji Yasuda Research Institute. “It’s undesirable for BOJ communication to cause so much volatility.”DEJA VUNow, said economist Yoshimasa Maruyama at SMBC Nikko Securities, “the chance of a near-term rate hike is gone. In fact, the chance of another hike this year has diminished significantly.”The central bank did not respond to a request for comment on Thursday to criticisms that it is responding to market moves rather than data in setting policy. Uchida on Wednesday insisted the BOJ was focussed on the economy. “If the market volatility changes our projection, risks and view on the likelihood of hitting our price target, then market moves would affect our decision,” Uchida told a press conference after addressing business leaders. “Obviously, our goal is to achieve price stability and through that, healthy economic development. We’ll pay heed to economic developments in setting policy.”Japan’s ruling and major opposition parties have agreed to summon Ueda to a special parliament session this month to explain the rate hike.In a rare public chiding, ruling Liberal Democratic Party executive and former finance ministry official Satsuki Katayama urged the BOJ on Wednesday to communicate better with markets, saying the LDP will likely discuss whether the July hike was a mistake.The BOJ has been here before.It raised rates from zero in August 2000, ending a then-novel experiment despite government objections. Ueda, then a policy board member, voted against ending zero rates.Next, the U.S. tech bubble burst, hitting Japan’s export-reliant economy. Eight months later the BOJ reversed course, rolling out a new experiment, quantitative easing: flooding the market with yen to support the economy and fight deflation.By February 2007 it had raised rates to 0.5% when the global financial crisis pushed Japan into recession and forced the bank to cut rates back near zero.In both cases, the BOJ drew fierce political criticism for phasing out stimulus too hastily.’PREOCCUPIED’ WITH ANGER OVER YENThis time few politicians are demanding the BOJ loosen monetary policy. Days before the July hike, Prime Minister Fumio Kishida said the BOJ’s policy normalisation would support economic revitalisation.Shigeru Ishiba, a leading candidate seeking to replace Kishida in a September LDP leadership election, told Reuters he welcomed the BOJ’s plan to gradually raise interest rates.Politicians, who had long pressured the BOJ to ease policy to weaken a soaring yen to help exporters, have switched in the past two years as the currency’s falls 38-year lows threatened to push inflation above the bank’s 2% target.The BOJ may pay a price if its hawkish turn is seen as succumbing to government pressure, some analysts say.”Recent data all pointed to a weak economy, so it didn’t make logical sense for the BOJ to turn so hawkish on the future rate hike path,” said former BOJ official Nobuyasu Atago. “Its communication with markets could have been better.”Complicating the BOJ’s task, it would be raising rates just as the Fed likely starts cutting, potentially heightening volatility in the dollar/yen exchange rate and hurting Japanese business sentiment.The BOJ has historically avoided moving in the opposition direction to the Fed for fear of hurting exports and causing disorderly market moves, said former BOJ board member Takahide Kiuchi.”This time, the BOJ may have been too preoccupied with public and political anger over excessive yen falls,” he said. “The very timing of the BOJ’s exit makes it extremely challenging to pull off in the first place.” More

MUMBAI (Reuters) -The Reserve Bank of India (RBI) kept its key interest rate unchanged on Thursday, as widely expected, retaining its focus on bringing inflation down even as global market volatility left other major central banks poised to ease policy. The Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the repo rate unchanged at 6.50% for a ninth straight policy meeting.Four out of six MPC members voted in favour of the rate decision.The MPC last changed rates in February 2023, when the policy rate was raised to 6.50%. The monetary policy stance was retained at ‘withdrawal of accommodation’ to aid the MPC’s focus on bringing inflation towards the target, with four of the six members voting in its favour.All 59 economists in the Reuters poll conducted in late July predicted the central bank would stand pat on rates.It is important for monetary policy to stay the course in bringing inflation down towards its 4% medium term target, RBI Governor Shaktikanta Das said, adding that India’s food inflation remains “stubbornly” high.”Growth remains resilient, inflation has been trending downward and we have made progress in achieving price stability, but we have more distance to cover,” Das said.Ensuring price stability is important for sustainable growth, Das said.”With growth remaining robust, the MPC still has room to hold on to policy stance to get confirmation on the disinflationary trend,” said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank. “We continue to expect scope for change in stance in the October policy with rate cuts beginning from December.”After the RBI maintained its hawkish policy stance, Indian shares fell but recovered later to trade flat. The 10-year benchmark bond yield IN071034G=CC > rose slightly to 6.872% from 6.8678% before the policy decision, while the Indian rupee was nearly flat at 83.93 against the dollar.Investors were hopeful the RBI will soften its overall stance on inflation following the recent souring of global market sentiment and firmer expectations the Federal Reserve will cut interest rates in September.Global equities and currencies tanked early this week as the Bank of Japan hiked rates to their highest levels since 2008 last week and fears of a U.S. recession rose on the back of weak employment numbers. While Indian equities fared better, the rupee fell to all-time lows, prompting central bank intervention.There are significant challenges to medium term global growth, Das said in his policy statement, while acknowledging recent market volatility and the move towards rate cuts by several central banks. “We will remain watchful of all incoming domestic and external data,” Das said at a press conference, giving no hint that global factors would alter the path of India’s monetary policy.”Policy guidance reinforced that domestic considerations will be prioritised, despite a sharp buildup in rate cut pricing for the U.S. Federal Reserve,” said Radhika Rao, senior economist at DBS Bank in Singapore.GROWTH, INFLATION FORECASTS UNCHANGED The RBI kept its growth forecast for fiscal 2025 unchanged at 7.2%, slower that the 8.2% expansion in fiscal 2024.Domestic economic activity remains resilient, Das said. The central bank also retained its inflation forecast at 4.5% in the current year.The annual retail inflation rate rose for the first time in five months in June, climbing above 5% on the back of a jump in food prices. Commenting on a decline in core inflation, which excludes volatile food and energy prices, Das said: “The public at large understands inflation more in terms of food inflation than the other components of headline inflation.” “Therefore, we cannot and should not become complacent merely because core inflation has fallen considerably.” More

TOKYO (Reuters) – Some Bank of Japan board members called for the need to keep raising interest rates with one saying they should eventually be increased to at least around 1%, a summary of opinions voiced at the bank’s July policy meeting showed on Thursday.At the July 30-31 meeting, the BOJ raised its short-term policy target to 0.25% from a range of 0% to 0.1% and released a detailed plan on how to taper its huge asset buying in another landmark shift away from a decade-long stimulus programme.Some in the nine-member board said inflation-adjusted real interest rates will remain very low even after the rate hike, which meant the BOJ would continue to support the economy with loose monetary policy, the summary showed.”The BOJ must proceed with further adjustment of the degree of monetary accommodation as appropriate” even after hiking rates in July if companies continue to raise prices, wages and ramp up capital expenditure, one member was quoted as saying.Another opinion also called on the BOJ to keep raising interest rates in a “timely and gradual manner”, as Japan’s neutral rate – or the level of borrowing costs that neither cools nor overheats the economy – seems to be at least around 1%, the summary showed.The BOJ does not issue an official estimate of the neutral rate, though analysts see it at anywhere between 1% and 1.5%. More

The Royal Institution of Chartered Surveyors said its measure of expected sales over the next three months was the strongest since January 2020, immediately before the coronavirus pandemic struck Britain. “The new government’s focus on boosting housing development alongside the recent quarter-point base rate cut does appear to have shifted the mood music in the sales market,” RICS Chief Economist Simon Rubinsohn said.”Inevitably, significant challenges lie ahead in delivering on the ambitions around planning reform and it is far from clear that the Bank of England will follow the August move with further easing over the coming months, but, even so, the policy mix is becoming more supportive for the sector,” he added.The overall picture for the housing market brightened slightly last month as mortgage rates fell ahead of the Aug. 1 BoE cut to borrowing costs from their 16-year high.A measure of new buyer enquiries turned positive for the first time in four months and agreed sales also improved.But RICS’ measure of house price prices in July slipped back to -19 from June’s -17. Economists polled by Reuters had expected an improvement to -10.Other house price data previously released by mortgage lenders Nationwide and Halifax pointed to a pickup in price growth last month. The picture was bleaker in the rental sector where demand from tenants increased while a measure of supply shrank, suggesting further rental price rises ahead.Rubinsohn said the findings reflected what he called “an increasingly hostile environment for investment in the sector”.The previous government’s delayed plans to tighten no-fault eviction rules have been picked up by the new administration, worrying some landlords, while changes to tax and energy efficiency rules have added to their costs in recent years. More

(Reuters) -Warner Bros Discovery (NASDAQ:WBD) said on Wednesday it wrote down the value of its TV assets due to the uncertainty of fees from cable and satellite distributors and sports rights renewals, sending its shares down nearly 10% in extended trading.The film and entertainment studio, which owns sports network TNT and streaming service Max, recorded a $9.1 billion non-cash goodwill charge in the second quarter. This charge, stemming from a reassessment of the assets’ value since the merger of WarnerMedia and Discovery, contributed to a $10 billion net loss for the quarter.The media landscape has significantly changed in the past two years, impacting valuations and expectations for traditional media companies and this current situation is reflected in the write down, CEO David Zaslav said in a call with analysts.Asked whether the company was considering hiving off assets, CFO Gunnar Wiedenfels said on the call: “We’ve said before, you shouldn’t be surprised to see us engaging in you know, whatever M&A processes are going on out there.” The shift of viewers from traditional television to streaming services has led to a decline in advertising revenue and affiliate fees, impacting the profitability of Warner Bros. Discovery’s television assets. This decline is further compounded by the escalating costs of acquiring sports rights.TNT failed to renew a broadcast deal with National Basketball Association games, at a time when live sports have become crucial for companies to increase viewership. The company sued the NBA last month.Losing the lawsuit would accelerate the decline of its TV business, analysts said. “The huge impairment charge from Warner Bros Discovery is essentially the final nail in the coffin of the traditional linear TV business,” said Bob O’Donnell, chief analyst at TECHnalysis Research.Content revenue in Warner Bros Discovery’s studio segment fell 6%, as the game “Suicide Squad: Kill the Justice League”, released earlier this year underperformed, compared to last year’s top game “Hogwarts Legacy”. Director George Miller’s much-awaited “Furiosa: A Mad Max Saga” underperformed at the box office following its release in May. The film raked in $67.5 million at the domestic box office, IMDb’s Box Office Mojo data showed, while it had a reported a budget of $168 million, according to analysts at TD Cowen.The studio’s stock has shed a third of its value this year.NOT ENOUGHStill, the company’s direct-to-consumer customer base grew thanks to its cheaper ad-supported offerings and expansion of the Max streaming service to new markets.Global direct-to-consumer customers at the end of the quarter was 103.3 million, up from 99.6 million subscribers in the January-March period, and beating analysts’ estimates of 101.6 million, according to Visible Alpha data.Revenue from advertisements on its direct-to-consumer platforms nearly doubled to $240 million, trouncing Wall Street expectations, due to higher engagement on the Max streaming platform and strong subscriber growth, the company said.The company’s rival Walt Disney (NYSE:DIS) said on Wednesday that its Entertainment unit, including its streaming businesses Disney+, Hulu and ESPN+, recorded its first profit in the April-June quarter.”Strong streaming subscriber growth is not enough to make up for weakening fundamentals, the loss of NBA broadcast rights, advertising weakness, and misses across free cash flow, revenue, EBITDA, and earnings,” said Michael Ashley Schulman, chief investment officer of Running Point Capital.Excluding one time items such as the goodwill charge, the company’s loss was 36 cents per share, wider than estimates of 22 cents per share, according to LSEG data.The film raked in $67.5 million at the domestic box office, IMDb’s Box Office Mojo data showed. It had a reported budget of $168 million, according to analysts at TD Cowen.The media giant reported revenue of $9.71 billion in the second quarter on Wednesday, compared to analysts’ estimate of $10.07 billion. More

LONDON (Reuters) – Elon Musk has been accused of exacerbating tensions after a week of far-right rioting in Britain, sparking calls for the government to speed up the rollout of laws policing harmful online content.Misinformation and calls to violence have spread on social media over the past week after far-right and anti-Muslim groups seized on the fatal stabbing of three young girls in the English town of Southport.As rioters clashed with police in some towns and cities, Musk joined the debate on his X platform, posting that civil war was “inevitable” in Britain. Prime Minister Keir Starmer’s spokesperson said there was “no justification” for such comments. Separately, Starmer warned social media companies that violent disorder whipped up online was a crime “on your premises”, while adding there was a “balance to be struck” in handling the firms.The official responses reflect the difficult situation the government is in.An Online Safety Bill was passed into law in October but has yet to be implemented. It gives media regulator Ofcom the power to fine social media companies up to 10% of global turnover if they are found in breach of the law, for example by failing to police content inciting violence or terrorism. But Ofcom is still drawing up guidelines outlining how it will implement the law, with enforcement not expected until early next year. In the wake of recent violence, some are calling for the rules to be rolled out sooner. Adam Leon Smith, a fellow at industry body BCS, the Chartered Institute for IT, wants Ofcom to start enforcing the Online Safety Act as soon as possible, he told Reuters. “There must be a tipping point where a foreign billionaire platform owner has to take some responsibility for running a toxic bot network that has become one of the main sources of fake news and misinformation in the UK,” he said. Laws properly governing online safety are long overdue, said Kirsty Blackman, an MP for the Scottish National Party.”I would back moves for the timetable to be accelerated,” she said. “Requirements should be brought in as soon as possible, particularly for the biggest and highest-risk platforms.” An Ofcom spokesperson said: “We’re moving quickly to implement the Online Safety Act so we can enforce it as soon as possible. To do this, we are required to consult on codes of practice and guidance, after which the new safety duties on platforms will become enforceable.”Musk did not immediately respond to requests for comment.ENFORCEMENTWhile those inciting violence online can be prosecuted individually, the government has no way to force social media companies to police their platforms until the Online Safety Bill comes into effect. On Tuesday, Britain’s technology minister Peter Kyle said he had met with TikTok, Meta (NASDAQ:META), Google (NASDAQ:GOOGL) and X to emphasize their responsibility to prevent the spread of harmful content online. The companies did not immediately respond to requests for comment.Despite this, a number of posts on X actively encouraging violence and racism – seen by Reuters – remain live and have been viewed tens of thousands of times. At the time of writing, Musk’s X posts on the issue have been read by tens of millions of users, according to the site’s own metrics. One post containing misleading information about a Kurdish teenager convicted of rape in Britain has been seen 53 million times. Another, in which he suggested Muslim communities were receiving undue police protection, had been viewed 54 million times. While such comments themselves might not break the rules around illegal content, allowing direct calls for violence may.”We would encourage Ofcom to speed up its work on the guidelines, so that X and other social media platforms face financial penalties if they do not remove harmful content,” said Iman Atta, director of advocacy group Tell MAMA, which monitors anti-Muslim activity in Britain. “There is a need to force platforms to take more drastic action against extremism and hate speech,” she said. More

(Reuters) – A look at the day ahead in Asian markets. Asian assets are in for a rocky ride on Thursday after soothing words from the Bank of Japan’s deputy governor about recent yen volatility were overtaken by a negative turn in U.S. markets, a reminder that market conditions remain challenging. Wednesday’s U.S. session saw the dollar, bond yields and stock market volatility rise and Wall Street fall. Amongst all, that was a weak $42 billion auction of 10-year Treasury bonds. The auction was a big disappointment. Its ‘tail’ – how much higher the yield at sale was relative to where it traded before – was a massive 3 basis points, and demand was 2.32 times the amount of debt on offer, the weakest since December 2022.Also, bear in mind that MSCI’s benchmark Asian and emerging market stock indexes chalked up strong gains on Wednesday of 1.8% and 1.9%, respectively, their best performance in two months. They may struggle to maintain much momentum on Thursday.There is a decent sprinkling of regional event risk in Asia with Philippines GDP, Japanese current account, Taiwan trade numbers and a Reserve Bank of India policy decision all on tap.The BOJ also releases the summary of opinions from its instantly historic July 30-31 policy meeting that some analysts say contributed to the current market turbulence.Investors are still mulling BOJ Deputy Governor Shinichi Uchida’s remarks on Wednesday that the central bank won’t raise interest rates when financial markets are unstable, and that recent market turbulence is “clearly a downside risk to the economy.” This helped lift the Nikkei and slammed the yen – in late U.S. trading the currency was down 1.8% against the dollar for its biggest daily fall in 18 months. Implied yen volatility eased a little on Wednesday but remains elevated across the curve. The wild gyrations of the last few days may have passed, but traders are understandably maintaining a cautious and defensive stance. One-week volatility is notably higher than one-month volatility, an indication that investors still expect quite a bit of churn in the yen in the coming days.India’s central bank is widely expected to hold rates steady at 6.50% for a ninth straight meeting, but investors are hoping for a more dovish tone that could open the door for an October rate cut.At this juncture, an October cut seems unlikely. Current money market pricing attaches roughly a one-in-five chance of a cut in October and suggests a quarter-point rate cut is only fully priced by February next year.Taiwan’s July trade figures, meanwhile, will be closely scrutinized for clues on the strength of AI-related demand for microchips. Exports in June soared 23.5% from a year earlier thanks to “strong business opportunities in new technology applications”, the finance ministry said then.Here are key developments that could provide more direction to Asian markets on Thursday:- India interest rate decision- Taiwan trade (July)- BOJ summary of opinions More