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Stronger In a Range

AUDUSD TECHS

Weaker In A Range

US TSYS SUMMARY

Ending The Week On A Soft Note

EURJPY TECHS

Bearish Risk Growing

USDJPY TECHS

Stronger, But Still Vulnerable

US

SP500 PE Ratio vs. CPI Inflation

     TOKYO (MNI) - Bank of Japan Deputy Governor Masazumi Wakatabe said Thursday
that if a central bank took strong measures to burst an asset bubble, it would
push the economy into a serious recession.
     "The central bank should not ignore asset price fluctuations completely,
but there are still discussions, regarding whether to tighten monetary policy as
a pre-emptive measure against a rise in asset prices," Wakatabe said at
symposium on innovation at Keio University in Tokyo.
     Wakatabe has said that serious side-effects of a prolonged easy policy
haven't been observed, indicating the BOJ doesn't need to adjust tits policy to
mitigate against side-effects.
     Other key points from Wakatabe's speech;
     --"In the event of a financial crisis, ex post policy response becomes
extremely important." "As downward pressure is exerted on the economy in the
wake of the crisis, it will be necessary to respond with vigorous expansionary
macroeconomic policies," Wakatabe said, adding, "If the response is inadequate
or delayed, the economy will fall into deflation and face difficulty escaping
from it."
     --"It has become clear that an excessive rise in asset prices above
fundamentals -- the emergence of the bubble economy -- and its collapse
triggering a financial crisis will exert a considerable negative impact on the
economy."
     --Regarding a financial crisis, however, there is no better way than to
prevent it. In doing so, ex ante and ex post financial regulation -- monitoring
excessive risk-taking behavior of financial institutions and setting up a
resolution mechanism -- as well as macroprudential policy -- analyzing and
assessing systemic risk in the financial system as a whole and taking policy
measures based on it -- play key roles.
     --The latest Financial System Report, released by the BOJ Monday said, "It
has become increasingly important to accurately assess financial vulnerabilities
amid the prolonged low interest rate environment."
     --It also warned that financial institutions' core profitability is falling
and regional banks' capital adequacy is falling.
--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
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MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com