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Kuroda Says Japan Still a ‘Long Way’ From Meeting Inflation Goal

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Haruhiko Kuroda
  • Kuroda Says Japan Still a ‘Long Way’ From Meeting Inflation Goal

Bank of Japan Governor Haruhiko Kuroda said the country had escaped from deflation but still had more progress to make before reaching its goal for 2 percent inflation.

“While the policy approach has steered Japan’s economy in the right direction, our intellectual journey has not yet been completed,” Kuroda said in speech at the University of Oxford on Thursday. “The rate of change in the consumer price index recently has been around 0 percent and there is still a long way to go until the price stability target of 2 percent is achieved.”

Japan’s economy grew at an annual rate of 1 percent in the first quarter, a government report showed Thursday. While gross domestic product expanded for a fifth straight quarter, the longest streak in a decade, inflation remains far away from the BOJ’s 2 percent target.

He said that the main reason was inflation expectations have declined “and have continued to be subdued.”

Kuroda has pledged to continue controlling Japan’s bond yield curve by keeping a short-term rate on bank reserves at -0.1 percent and pinning the benchmark 10-year yield at around 0 percent. The yield on the 10-year note has been between 0 percent and 0.1 percent for the past three months.

Most of economists forecast no policy change from the BOJ in coming months, even with inflation hovering just above 0 percent. In fact, most expect the BOJ’s next step to be tightening, given expectations for moderate improvement in inflation, and few tools left for further easing.

Balance Sheet

Now in a fifth year of its unprecedented quantitative easing, the BOJ has expanded its balance sheet to nearly the same size as Japan’s economy. That is unnerving some lawmakers, as is the fact that an end to the stimulus is nowhere in sight because inflation remains weak.

The BOJ is contending with a growing debate about a possible exit among market participants, the media and some lawmakers. Kuroda has faced calls from lawmakers from the ruling Liberal Democratic Party to explain how and when the central bank would exit its current easing program.

Officials realize it’s unrealistic and not constructive to try to remain silent on the issue and the BOJ is considering how to communicate its thinking about handling a future exit from stimulus, according to people familiar with central bank’s discussions.

The yen strengthened against the U.S. dollar and shares in Japanese banks and insurers surged after Bloomberg reported the central bank’s deliberations on Thursday.

Watching Yen

“I continue to monitor exchange rate development and certainly could be concerned about, if the exchange rate deviated from what economists call the equilibrium range of exchange rate, substantially — upward or downward,” he told the audience during a question and answer session after the speech. “But we do not manage our monetary policy in order to stabilize the exchange rate.”

Kuroda, who earned a masters degree in economics at Oxford in 1971, spoke as the U.K. election was under way. The result could strengthen the yen, as happened following the Brexit vote last year.

As of Thursday afternoon in Tokyo, the yen has weakened about 15 percent against the dollar since Kuroda’s BOJ began its record easing in 2013, helping boost stock markets, corporate profits and household sentiment. Any reversal could make Kuroda’s battle to eradicate Japan’s “deflationary mindset” more difficult by also reducing inflationary pressures in the economy through lower import costs.

Speculation is rising about whether Kuroda might serve another term when his current one ends in April next year. He has declined to comment on whether he could be reappointed. Many private economists in Tokyo say there is a chance he will be.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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