Overwhelming Majority See More Stimulus From Kuroda This Week
Haruhiko Kuroda hasn’t faced such intense expectations for more monetary stimulus anytime since his debut meeting as Bank of Japan governor in 2013.
Thirty-two of 41 analysts forecast that Kuroda and the BOJ board will expand their record program at the two-day meeting ending on July 29, according to a Bloomberg survey conducted July 15-22. That is the highest percentage of respondents in any poll since his first decision more than three years ago, when economists were unanimous in estimates that Kuroda would add to easing.
An increase in purchases of exchange-traded funds remains the most likely area for a boost, followed by a deeper cut in the negative interest rate applied to a portion of the money that commercial banks park at the BOJ, according to the survey. Just under half of the respondents said Kuroda would accelerate buying of government bonds, which is the mainstay of his efforts to drive inflation.
“This meeting tests the seriousness of BOJ’s commitment to achieving the 2 percent price target,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. and a former BOJ official. “Further easing is likely to counter the argument that the BOJ is reaching the limit” of its policies. Kanno expects an increase of purchases of bonds and ETFs, as well as a bigger cut in the policy interest rate.
IMF raises China growth forecast
The International Monetary Fund (IMF) increased its growth forecast for China in 2016 due to the country's "determined and decisive" implementation of reforms and the "steady" support for the economy, said managing director Christine Lagarde here on Friday.
Lagarde made her remarks when she met the press together with Chinese Premier Li Keqiang and other five chiefs of international financial institutions after a round-table meeting at Diaoyutai State Guesthouse in Beijing.
She said the IMF had increased the growth forecast for China in 2016 by 0.1 percentage point to 6.6 percent for two reasons; "First of all, we have witnessed the determined and decisive implementation of reforms; and second, there was also support given to the economy in order to encourage growth to go forward."
"On the latter point, it did not take the form of vast fiscal stimulus but simply some solid and steady support in order to make sure that growth was indeed sustainable," she added.
China Bank to Transform $1.6 Billion of Bad Debt Into Securities
Agricultural Bank of China Ltd. is planning China’s largest sale so far under a trial program for lenders to offload bad loans by packaging them up as asset-backed securities.
The lender plans to sell securities backed by 10.7 billion yuan ($1.6 billion) of nonperforming loans on the interbank bond market, it said July 22 on the Chinese bond clearing house website.
The sale price will be the equivalent of 29 percent of the loans’ face value, with the recovery rate on the debt forecast at 41 percent, the lender’s statement showed.
As corporate leverage soars and economic growth cools, China’s banks face a rising tide of bad loans. Dorris Chen, a credit analyst at Pacific Investment Management Co., said last week that the Ministry of Finance will eventually have to inject capital into the banking system, without saying when.
The nation’s efforts to get to grips with its credit woes include debt swaps for local governments, proposals for banks to swap loans for equity stakes in companies, and the trial of the NPL-backed securities.
Oil prices dip on ongoing oversupply, economic headwinds
Oil prices held near two-month lows on Monday amid worries that a global crude and refined product glut would weigh on markets for some time to come.
International Brent crude oil futures were trading at $45.51 per barrel at 0623 GMT, down 18 cents from their previous close. U.S. West Texas Intermediate (WTI) crude was at $44.03, down 16 cents a barrel.
Reference: Xinhua,Bloomberg,Reuters
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