Aurelia Butler

TOKYO (Reuters) – Several Bank of Japan (BOJ) board members said the central bank must be vigilant to the risk of inflation accelerating more than expected, minutes of the March policy meeting showed on Monday.A few of the nine-member board also said they saw some “positive signs” emerging in Japan that suggest the economy was making progress towards achieving the BOJ’s 2% target, the minutes of the March 9-10 meeting showed.The board debated how companies were continuing to hike prices to pass on rising raw material costs, and price increases broadening to services, the minutes showed.”It was important to use a wide range of data and look back on the basic mechanism behind price moves, to deepen our understanding on inflation developments,” one member said.At the March meeting, the BOJ maintained its ultra-loose policy, including a 0.5% cap for the 10-year bond yield that had come under attack from markets betting on a near-term interest rate hike in the wake of recent rises in inflation.While some saw positive signs emerging on the price front, many members said there was “extremely high” uncertainty over Japan’s economic outlook that warranted keeping monetary policy ultra-loose, the minutes showed.”The BOJ must focus on the risk of missing the chance of achieving its price target with a premature policy shift, rather than that of being too late in modifying policy,” one member was quoted as saying.Another member said any debate of a policy shift must be made cautiously as a reversal of ultra-loose policy would have wide-ranging effects on the public, the minutes showed.The March meeting was the final one chaired by Haruhiko Kuroda, who retired as governor in April and was succeeded by Kazuo Ueda.Markets are rife with speculation that Ueda will steer the BOJ away from the radical stimulus measures deployed by Kuroda, which is drawing increasing criticism for distorting market pricing and crushing financial institutions’ profits. More

The plan is designed to directly ease price pressures and inflation, the federal government said, which has eased in the first quarter but still sits near 30-year highs of 7.0%.”The centrepiece of the budget … will be cost-of-living relief that doesn’t add to inflation,” Treasurer Jim Chalmers said in a statement, ahead of Tuesday’s federal budget.”People are under the pump. We’ve carefully calibrated and designed this Budget so that it takes pressure off the cost-of-living rather than add to it.”The government is set to unveil in the budget financial assistance for more than 5 million low-income families, small businesses and pensioners struggling with high power bills.Chalmers has repeatedly stated his budget would be restrained on spending so as not to add to inflationary pressures, while also giving some relief, after the Reserve Bank of Australia (RBA) last week stunned markets with a rate rise, defying trader expectations for an extended pause.The RBA on Friday warned that risks to inflation were on the upside given low productivity growth, rising energy prices and a surge in rents.The latest relief measures come after the government set aside A$11.3 billion for wage rises for aged care workers over four years, while announcing an additional 5% tobacco tax and A$2.4 billion in more tax on oil and gas producers.Australia’s deficit is expected to shrink sharply, the budget is expected to show, as its coffers bulge with tax windfalls from commodity exports, yet the outlook will be a sober one as fiscal challenges loom.($1 = 1.4830 Australian dollars) More

(Reuters) -Australia’s Westpac Banking (NYSE:WBK) Corp on Monday warned of “intense” mortgage competition pressuring its margins in the current half, and said it was dropping a cost target to instead focus on relative peer performance because of high inflation.Westpac, which previously benefited from a bold cost-cutting strategy, disclosed plans to move away from an absolute expense target and to focus more on improving its expense-to-income ratio in comparison to its peers. “We’re making this change due to expected continuing inflation pressure, ongoing and new risk and regulatory requirements and our focus on growth,” Westpac CEO Peter King said in a statement.Westpac, the country’s No. 3 bank, also said credit growth in housing and business lending was starting to ease after reporting a 22% jump in net profit to A$4 billion ($2.70 billion) for the six months ended March 31.Australian lenders have relied heavily on mortgages and retail deposits, but that is now threatening to hurt profitability as competition intensifies and weakens margins.Rival ANZ Banking Group Ltd, which reported a 23% jump in cash profit on Friday, signalled its plans to diversify from mortgages as the windfall from high interest rates peaks. Westpac said it had reduced its cost base further, bringing its expense-to-income ratio down to 45.9% in the first half, from 52.8% a year earlier. The company had earlier revised its cost target to A$8.6 billion by fiscal 2024, compared to a prior goal of A$8 billion. Net interest margin – the difference between interest earned from lending and paid for deposits – rose 5 basis points from a year earlier to 1.96% at the end of March. Westpac declared an interim dividend of 70 Australian cents per share, up from 61 Australian cents last year.($1 = 1.4810 Australian dollars) More

Brussels has proposed sanctions on Chinese companies for supporting Russia’s war machine for the first time since the conflict in Ukraine began, in a development likely to increase tensions with Beijing.Seven Chinese businesses accused of selling equipment that could be used in weapons have been listed in a new package of sanctions to be discussed by EU member states this week, which has been seen by the Financial Times.Some of the companies have already been placed under sanctions by the US. The EU’s move is likely to rankle with Beijing, which is anxious to keep Brussels from siding with Washington in their battle for global influence.Brussels has until now avoided targeting China, arguing that no evidence showed it was directly providing weapons to Moscow.The sanctions list needs unanimous approval from the 27 member states before it can be enforced.Two mainland Chinese companies on the list, 3HC Semiconductors and King-Pai Technology, have already been placed under sanctions by the US. Two companies based in Hong Kong that are on the EU list are already on the US Treasury list: Sinno Electronics and Sigma Technology. The sanctions proposal from the European Commission said: “In view of the key enabling role of electronic components for use by Russia’s military and industrial complex for supporting the war of aggression against Ukraine, it is also appropriate to include certain other entities in third countries involved in the circumvention of trade restrictions as well as certain Russian entities involved in the development, production and supply of electronic components for Russia’s military and industrial complex.” It accused 3HC, which makes computer chips, of “attempting to evade export controls and acquiring or attempting to acquire US-origin items in support of Russia’s military and/or defence industrial base”. King-Pai provides microelectronics to Russia that “have defence applications that include cruise missile guidance systems”, the US Treasury has previously said. Brussels is also proposing sanctions on some Iranian companies involved in the manufacture and supply of drones to Russia.The EU is seeking to tackle the circumvention of sanctions more generally. The draft includes measures that would allow the EU to restrict sales of certain products to third countries if diplomatic pressure did not change their behaviour. Member states would have to approve individual measures against companies or countries. There are also powers to ban oil tankers that conceal their location without good cause from EU ports. The FT has reported that ships have been circumventing an embargo on Russian seaborne oil imports by pretending their loads are from elsewhere. The commission has also proposed widening the range of banned exports to Russia. Finally, it is loosening restrictions on asset transfers to sanctions-hit entities to allow western companies in joint ventures with them to sell up.The commission declined to comment. More