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Bank of Japan Keeps Monetary Stimulus Target Unchanged

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Harushiko Kuroda

The Bank of Japan kept its main monetary stimulus target unchanged Friday while outlining operational changes for its purchases of government bonds, exchange-traded funds and real estate investment trusts.

Friday’s decision to continue expanding the monetary base at an annual pace of 80 trillion yen ($650 billion) was forecast by all but one of 42 economists surveyed by Bloomberg. With analysts almost evenly split on whether the central bank will add to its asset-purchase program next year or stand pat, attention turns to Governor Haruhiko Kuroda’s briefing later this afternoon in Tokyo.

The aim of the changes for JGB maturities, ETF purchases and Japanese real estate investment trusts will be in focus, along with his views on the Federal Reserve’s interest-rate hike, the oil market rout and recent economic indicators. Kuroda said earlier this month that price trends were improving, while repeating he wouldn’t hesitate to adjust monetary policy if needed.

“The BOJ extended the duration of JGBs to show they are not going to taper their stimulus for now,” said Junko Nishioka, chief economist for Japan at Sumitomo Mitsui Banking Corp. in Tokyo. “Now that they adjusted their policy in December, they will wait and see how things will develop.” Nishioka added that she no longer forecasts further easing in January.

The Topic index of stocks jumped as much as 2 percent after the BOJ’s announcement, before falling to trade down 0.6 percent at 1:27 p.m. in Tokyo. The yen fell to 123.56 against the dollar, before recovering to trade 0.4 percent stronger.

Bond Buying Changes

The bank extended the average maturities of Japanese government bonds it buys to seven to 12 years from seven to 10 years currently. This change was opposed by three board members, Takahide Kiuchi, Koji Ishida and Takehiro Sato.

In addition to the annual purchase of 3 trillion yen worth of exchange-traded funds, the bank established a new program to buy 300 billion yen in ETFs. The new program will target companies investing “proactively in physical and human capital” and start from April 2016 with ETFs tracking the JPX-Nikkei Index 400.

These changes passed by a 6-3 vote, opposed by Sato, Ishida and Kiuchi, the only board member to also vote against the main monetary base target.

The bank will increase the maximum amount of real-estate investment trusts it can buy to 10 percent of each issue, from five percent currently.

Data since the last policy meeting in November show that Japan avoided a midyear recession, and people familiar with discussions at the central bank told Bloomberg the economy has been gradually gathering momentum in line with the BOJ’s expectations.

Oil Price Drop

Still, the renewed slide in crude oil and the risk that it could suppress prices in the long term means that BOJ officials are closely watching gauges of inflation expectations, the people said.

The Dubai measure for crude oil is trading around $32 per barrel, compared with the low end of BOJ assumptions for its latest price forecasts of $50 per barrel.

Economy Minister Akira Amari has indicated there is no need for the BOJ to rush to achieve its 2 percent inflation target given the current impact of energy costs, even with the BOJ’s preferred price gauge falling since August.

Fed Policy

The Federal Reserve’s first increase in interest rates since 2006 this week underscores the difference in policy between the two central banks, and the renewed pressure this may bring to bear on the yen to weaken against the dollar.

The Japanese currency has lost about 30 percent of its value against the dollar since Prime Minister Shinzo Abe took office in 2012 with a plan to reflate the economy.

Even so, exports haven’t responded. While the value of shipments overseas has jumped 20 percent since November 2012 to last month, volumes are only 1.1 percent higher.

Both Abe and Kuroda have urged companies to invest more, but there has been little sign of them using their cash reserves, which reached another record last quarter.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Banking Sector

UBA Grows Profit by 33 Percent YoY, Declares 20k Per Share Interim Dividend in H1 2021

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UBA Insider dealings

Africa’s leading financial institution, United Bank for Africa (UBA) Plc, has announced its audited half year financial results for the half year ended June 30, 2021, showing impressive growth across all major income lines and performance indicators.

The pan African financial institution delivered a 33.4 per cent appreciation in its profit before tax which rose to N76.2bn as at June 2021, up from N57.1bn recorded in the same period of 2020, translating to an annualised Return on Average Equity of 17.5% as against 15.1% a year earlier.

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Bank of Ghana Holds Key Interest Rate at 13.5%

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Ghana one cedi - Investors King

Ghana’s central bank on Monday kept its main interest rate unchanged at 13.5% with concerns over rising inflation balanced out by optimistic Covid-19 recovery forecasts, Governor Ernest Addison said in a statement.

The Ghanaian economy grew by just 0.4% last year – its slowest rate since 1983. But it has gained ground in 2021, expanding 3.1% in the first quarter and 3.9% in the second.

The bank’s Monetary Policy Committee sees Ghana’s overall economic outlook continuing on an upward trajectory despite inflation having risen for a fourth month in a row in August.

“Developments continue to point to a sustained recovery in economic activity following the downturn at the peak of the pandemic,” Addison said.

“Given these considerations, and the fairly balanced risks to inflation and growth in the outlook, the committee decided to keep the policy rate unchanged,” he added.

Ghana’s consumer price inflation was at 9.7% year-on-year in August, with food inflation, the largest contributor to the country’s overall inflation rate, rising for a third straight month.

Although the inflation rate remains within the central bank’s targeted band of 8% plus or minus 2 percentage points, Addison cautioned that a close monitoring of the situation would be necessary to swiftly mitigate any impacts to local markets.

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Stanbic IBTC: Working Towards Net Zero Emissions

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Stanbic IBTC Bank- Investors King

As part of the Stanbic IBTC 2021 Sustainability Week event, Stanbic IBTC Holdings PLC, a member of Standard Bank Group, organised a sustainability webinar tagged “Working Towards Net Zero Emissions”.

The objective of the virtual event which was held on Monday, 20 September 2021 via the Group’s #Bluetalks platform, was to promote public awareness on the impact of climate change and provide practical methods towards reducing carbon footprints and achieving net zero emissions.

Delivering his opening remark at the event, Dr. Demola Sogunle, Chief Executive, Stanbic IBTC Holdings PLC said: “We all cannot continue to ignore our responsibility in the current changes to the climate. Through small adjustments leading to a more conscientious and sustainable lifestyle, each one of us can take part in the global climate protection project. As reflected in one of our strategic value drivers SEE (Social, Environmental and Economic) Impact, Stanbic IBTC is focused on ensuring it does business responsibly whilst positively impacting the society and environment where we operate. As such, the 2021 Stanbic IBTC Sustainability Week is an opportunity for us to advance awareness around practical steps we are taking, and more which we can take, to make our world a better place.”

The webinar featured seasoned experts including Temesoye Jack, Group Head, Sales, Banks, Gas Stations and SMEs, Starsight Energy; Professor Kenneth Amaeshi, Chair in Sustainable Finance and Governance at the European University Institute (EUI) and Oluwasegun Olajuwan, Group Chief Executive Officer, THLD Group.

Temesoye Jack stated that renewable energy sources like solar energy can help countries attain net zero emissions. She said, “Solar energy can help us move towards reducing greenhouse emissions. We need to have more energy efficient offices nationwide. However, this shift will not happen overnight as it is a gradual process.”

She explained that Nigeria has barely scratched the surface when it comes to renewable energy and emphasised that sustainable practices do not have to end in the office but must be observed in all areas of the country

Prof. Kenneth Amaeshi highlighted the importance of harmonising technology upgrades and sustainable growth to reduce carbon emissions. He explained that sustainability at the global level is targeted at mitigating the adverse effects of climate change.

According to Prof. Kenneth, “From recent surveys, it is clear individuals are ready to go green. The affordability of clean energy will determine if we will be able to reduce carbon emissions.”

Speaking on practical steps that can be adopted to help in achieving net zero emissions, Oluwasegun Olajuwan, Group Chief Executive Officer, THLD Group, said “Autogas has been around for 40 years, and Nigeria is not fully embracing it. It is safer, cleaner and more cost effective than fossil fuel and diesel. Vehicle conversion from fuel to Autogas is affordable. CNG (Compressed Natural Gas) is more efficient than fuel. The use of CNG in vehicles mitigates the emission of nitrous oxide and hydrocarbons by 40% and 90% respectively, compared to petrol.”

Omolola Fashesin, Head of Sustainability at Stanbic IBTC, thanked the panellists for the informative session, which helped create awareness of alternative sources that can help reduce carbon emissions. She urged the participants to apply learnings from the webinar to take practical steps to reduce their carbon footprint.

Finally, in his closing remarks, Kunle Adedeji, Executive Director Finance and Value Management stated that “at Stanbic IBTC, we are committed to facilitating a better and more sustainable future for all. We have already commenced various workstreams that will help us on the journey towards Net Zero emissions. Some of these include understanding our energy sources, consumption patterns and possible areas for efficiency; adoption of cleaner energy sources in our office locations (leveraging Autogas and Solar energy solutions); and adoption of Tree Planting programs which will help us with carbon sequestration.”

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