Inflation Spikes to 41-Year High in Japan. BOJ’s Stubborn & Reckless Kuroda Lets it Rip

But the architect of Abenomics will be outa there in April.

By Wolf Richter for WOLF STREET.

Japan’s “core” Consumer Price Index for all items less fresh food – which the Bank of Japan uses for its 2% inflation targeting – rose to 4.0% in December, the highest since 1981, and double the BOJ’s target, even outdistancing all the consumption-tax-hikes that had caused the prior spikes, according to data from Japan’s Statistics Bureau today.

Inflation shot through the BOJ’s inflation target (purple line) in April 2022. And the BOJ, under the Abenomics fossil Haruki Kuroda, is clinging to the fiction that this inflation is “transitory,” and it is still stubbornly and recklessly fueling this inflation with its negative interest rate policy, the last central bank in the world to cling to NIRP despite raging inflation.

Kuroda is the architect of Japan’s infamous money-printing binge under the economic religion of Abenomics, which started in 2012. But he’ll be out in April, after which the BOJ will likely do some navel gazing in form of a monetary policy review. It’ll be up to the next person to deal with this mess. Meanwhile, they’re letting it rip.

Even today, relentlessly reckless, Kuroda, speaking at the World Economic Forum in Davos, defended the BOJ’s monetary policy, which it had left unchanged on Wednesday, and he extra recklessly committed to continuing the BOJ’s “extremely accommodative” monetary policies. But he’ll be outa there in a couple of months.

The CPI for all items also rose to 4.0%, the worst inflation since 1990, having now outdistanced the consumption-tax spike of May 2014:

Some of the major categories of inflation.

  • Food: +7.0%. Includes: fresh fish and seafood +16.2%; fresh meats +7.1%; dairy products and eggs +9.0%; meals outside the home +5.8%.
  • Household electricity, gas, water: +15.2%.
  • Household durable goods: +10.8% (furnishings, appliances, utensils, bedding, etc.).
  • Repair and maintenance: +7.8%
  • Communication: +7.2%
  • Clothing and footwear: +2.9%
  • Rent: +0.1% (that’s nice)

Governments hold down inflation where they control prices.

  • Healthcare inflation: In Japan’s system of universal healthcare, the government largely decides what consumers have to pay:
    • Medical care: +0.4%
    • Medicines: +1.3%
    • Medical supplies and appliances: +1.0%
    • Medical services: -0.3%
  • Public transportation: +0.8%
  • Education: +0.7%

End of the era of actual price stability.

For over two decades, Japan had enjoyed something resembling actual price stability, where bouts of inflation were followed by some mild deflation, so that prices overall remained roughly level for 23 years.

Over this period, the CPI for all items as an index value to reflect price levels, not year-over-year price changes, had been relatively flat, ruffled by consumption tax hikes. This means that for Japanese consumers and businesses, the yen had roughly retained its purchasing power within Japan.

But now, inflation is spiking, and no one is prepared for the loss of the purchasing power of the yen – people, businesses, investors, savers, workers, retirees, the economy overall. And they’re facing a central banker that lives in his own world and cannot back off from 10 years of his failed monetary policies under Abenomics that he staked his fame on.

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  65 comments for “Inflation Spikes to 41-Year High in Japan. BOJ’s Stubborn & Reckless Kuroda Lets it Rip

  1. phleep says:

    At last a bill comes due, worse for the foot-dragging. With Japan’s demographics, this must hurt, far and wide. The premium on real estate footage makes it hard for grandma to live in junior’s “basement,” right?

    • Old Ghost says:

      Wolf wrote: “The CPI for all items also rose to 4.0%, the worst inflation since 1990, having now outdistanced the consumption-tax spike of May 2014:”

      At this point, I think most Americans would be happy with a 4.0% inflation rate.

      And renters would be thrilled if their rent only went up +0.1% this year.

      • Rosarito Dave says:

        But I think most Americans wouldn’t like the average wage increases of under 2%/yr over the last 10….

        • Hairy Gaijin says:

          4% is complete BS. It’s more like 20% at the supermarket. 30% on electricity. 20% of gasoline. Sales tax is now 10% and the DBags want more.

      • goomee says:

        As long as they don’t need to eat.

    • gametv says:

      I notice that Japan is able to control pricing in healthcare and education (I assume that means higher education). This is an area where the American economy is reckless and misguided. We allow unrestrained prices, but engage in government policies that distort the markets in ways that increase prices and profits to the competitors.

      We should stop confusing truly free market dynamics (price of a mobile phone) with the dynamics of an industry that is funded by government (healthcare, higher education, real estate) and given tax advantages (healthcare, higher ed and real estate all have tax deductions for either individuals or businesses).

      • Heron says:

        1/3 to 1/2 of the population is probably not worth educating beyond the 8th grade. Maybe later in life they will be in a better place to concentrate but in the interim we need to get them trained up so they can join the workforce, contribute and have plenty of common sense so they can avoid a lot of pitfalls.

      • Hairy Gaijin says:

        Yes healthcare and education are quite affordable compared to the US. Prices in those to fields are like the US was in the 70s and 80s.

      • anon says:

        gametv,

        Your second paragraph about market dynamics is, IMHO, 100% accurate.

        It concisely states one of the big issues that exists here in the United States.

        Thank you for your thoughtful comment.

  2. Phoenix_Ikki says:

    “Abenomics fossil Haruki Kuroda” wow someone even worse than our own Pow Pow? That bar is pretty low to begin with, as for inflation is transitory hope…has this fossil not seen the news around the world for the last 18 months?

    • George says:

      Wait a second… Japan’s trade deficit is 20% of its export volume vs. U.S. 50% (2022 data). So Japanese citizens are relatively more insulated from yen inflation than I am from dollar inflation.

      Just to be clear, I’m not arguing Abenomics was a good idea! Rather than Japan =/= U.S.

    • Cytotoxic says:

      Yes. It’s pretty clear that J Pow is actually one of the better ones, able to admit an error and willing to fix it even if it causes pain. Kuroda is nuts. Japan’s Paul Krugman.

  3. jon says:

    Kuroda has been in power for last decade or so and acting recklessly. Would he be held accountable ?

    • Wolf Richter says:

      “held accountable?” 🤣😍

      • Inno says:

        Both words have little meaning, separately or together, in this context. Triple joke, should have 3 emoji (what is the pl. form of “emoji”?)

    • Pea Sea says:

      He’ll be held accountable in precisely the same way that Powell, Yellen, Bernanke, and Greenspan are held accountable for the colossal asset bubbles and/or inflation they helped blow up. That is to say, he has about a one in four chance of receiving a Nobel prize.

  4. The Real Tony says:

    Their rigged stock market will also push inflation higher. I liked it better ages ago when market forces dictated stock valuations in Japan. They never learned from the days of Ben Bernanke with the Fed put and the backstopping of any losses beginning in 2012 in America.

    • Flea says:

      Every stock market in the world is overvalued,why do you think they have g7 – g20 meetings it’s all planned . That’s why you will have nothing and be happy.

  5. Giorgio says:

    Well…If we also look at Nikkei’s performance since 1987…it’s 0%!! Japan’s economy has been going nowhere for almost 40 years.

    • Wolf Richter says:

      The Nikkei was in a ridiculous bubble into 1989, which imploded (it’s still down 35% from its 1989 high). Ridiculous bubbles end that way. Check out other stock markets with similar patterns, such as China’s SSE which its ridiculous bubble high in 2007 (it’s still down 60% from it). Many European stock indices had ridiculous bubbles into 2000 and haven’t gone back.

      Now the US stock market is coming off a ridiculous bubble, so let’s see how that turns out long-term.

      In terms of the economy, you need to go to Japan and look at it before you talk nonsense.

      • Giorgio says:

        “In terms of the economy, you need to go to Japan and look at it before you talk nonsense.” I agree with you with almost all except this last sentence. Japan hikikomori syndrome 1.2% of the population! 10 days vacation per year. “Nearly one-quarter of Japanese companies require employees to work more than 80 hours of overtime a month, according to a 2016 government survey. Those extra hours are often unpaid.” Well, if you consider it “Good Shape Economy”…I don’t agree with you.

        • Wolf Richter says:

          So let’s clarify here to make sure: you’re saying, 80 hours of overtime a MONTH ON AVERAGE. That’s about 20 hours of overtime a week on average.

          None of the Japanese I know work 20 hours overtime a week every week. Not even if you consider going out to eat and drink together from the office as “work,” which they do a lot. They stay late some days for particular reasons, like everyone everywhere. We meet Japanese worker bees for dinner and drinks at 7 pm. The worst rush hour on trains in Tokyo itself is between 8 am and 9 am. So I’m not buying that over-20-hours-a-week-of-overtime-on-average stuff.

          That said, I worked 60 hours-plus a week for most of my life, well, part of my life — I also spent four years not working at all but traveling around the world. Now I work a lot more. I work 7 days a week, from early till late, doing exactly what I’m doing now. It’s a dirty job but someone has got to do it. I never got paid overtime in my life either, LOL

        • Inno says:

          You might want to read a bit about Wolf’s background…

      • Sea Creature says:

        “In terms of the economy, you need to go to Japan and look at it before you talk nonsense.” Wolf is right about this.

        Japan works very very well (except on occasion when it doesn’t and spectacularly fails but that is rare).

        It is sometimes cheekly regarded as “the world’s only successful communist country”, because of the very group oriented and group sensitive culture that make people and the country in general behave differently than most other countries (though with the younger generation, this is changing quickly) even if the economics (apparently) make no sense.

        The economy is slowing but this generally has less of an impact than it would in other places as a result. Its still very safe, clean and orderly.*

        The stock market may have gone no where since 1987, but the country has advanced dramatically (infrastructure, quality of housing, technology as well as soft things like the arts and culture) during that time.

        [*I lived in Japan (Tokyo) for about 20 years till the mid 2010s working in the financial industry, speak,read,write Japanese, have a lot of ‘on the ground’ experience]

        • eric says:

          “The stock market may have gone no where since 1987, but the country has advanced dramatically (infrastructure, quality of housing, technology as well as soft things like the arts and culture) during that time.”

          Now taking bts on how closely we follow that trajectory. The arts&culture thing should be fund to watch.

        • TheAltonRoute says:

          The success of Japan blows up the “diversity is our strength” mantra of the Western elite.

        • Hairy Gaijin says:

          The price inflation here now is getting bad.
          And the majority of workers are NOT getting raises.
          My salary has barely risen in 20 years.
          My daughter will graduate college soon and most companies are offering 250,000 yen starting salary with mandatory 40hrs. unpaid overtime per month. Sat-Sun off plus the meager 4 days off at Golden Week, 3 days at New Years, 3 days at Summer.

      • Augustus Frost says:

        It was 1989 for Japan’s stock bubble peak.

        But more generally, except for Japan, none of the others (not China) have the insane overvaluation of the US. None, not even Japan, were as overpriced for so long either.

      • Cytotoxic says:

        “In terms of the economy, you need to go to Japan and look at it ”

        No, no I don’t Wolf. No one does. That’s not how it works, and as a data-lover you should know that all you need is data. I am not interested in your ‘special truth’. The data is clear that the Japanese often work insane hours, they even have a word for ‘death by overwork’. There’s even a TV show about the overwork.

        The fact is that Japan has been in an economic torpor since about 1990. It’s economy has been sick with ridiculous monetary policy starting then-not 2012!-and the various pathologies that come with it, particularly zombie companies. This is all made so so much worse by Japan’s dire lack of immigration. A society without immigration is a poor unfree society. Japan has long been a place of slow economic growth, zombie-fossil companies with incredibly overworked employees, and shut-ins who live in their room at their parents’ house until they’re 40 or older. And that’s just economic problems and their consequences…

        Japan is doing the right thing wrt nuclear and will probably embrace something of a sane monetary policy. The third leg is letting in immigrants and lots of them. A Japan that does these three things will slay. It will be a power.

        • Wolf Richter says:

          BS. For DATA, Google: Average annual labor hours per worker

          You will find different sources, and they ALL agree that Japan is way down the list, in one listing #44. And that the US is above Japan (in the same list, #39). And that the countries at the top are countries like Mexico, Cambodia, Malaysia, Myanmar, Singapore, Bangladesh…. then further down China, Vietnam, the Philippines, India… South Korea … then Greece (!) etc. long before you get to the United States, and even longer before you get to Japan.

          These idiotic statements based on nothing embody everything that is wrong with the internet.

  6. YuShan says:

    That Japanese CPI graph that is on balance flat for the best part of 3 decades looks like a dream to me.

    The low inflation up to now is the reason why the Japanese government has got away with these massive debts for all these years. It will blow up when inflation becomes entrenched. Most people get this wrong and think that high inflation is beneficial because it is supposed to “inflate away” the debt over time. But the servicing cost will go up directly and will overtake tax revenues. It will then be very difficult to keep the confidence.

  7. Dr Duration says:

    For over two decades US and Japanese Treasury yields have headed to zero. It wasn’t until about June 2022 that this trend drastically changed.

    Everyone and their mum is screaming the US Fed is insane, while they now scream Japan is insane to ignore transitory inflation.

    The fear in Japan has always been deflation, but in twenty years, they’ve cooked their books like everyone across the globe. The difference between Japan growth and stability isn’t substantially different than anywhere else, so if anything, Japan stands out like a canary in a coal mine filled with poisonous gas.

    Nobody anywhere is accurate or accountable with economic prediction and tea leaf reading. I’m inclined to think they may be just fine, or at least no more incorrect than everyone else

    • Wolf Richter says:

      “It wasn’t until about June 2022 that this trend drastically changed.”

      Close. The actual day — the end of the four-decade bond bull market — was August 5, 2020, which was when the 10-year yield bounced off 0.5% and has been rising ever since. By June 2022, it was already over 3%.

      • Old school says:

        I want to see 10 year rate at bottom of next recession before saying the long term trend is done. We all know Fed and fiscal policy was too much. Let’s see what the world looks like without so much money in it.

  8. LordSunbeamTheThird says:

    My wife in Hokkaido has definitely noticed the inflation and the secret is out, so to speak. Not as bad as the UK with coming up for 20% food inflation over 2 years… I think she has mainly noticed the cost of fuel going up. Food has always been extortionate in Japan because of the disproportionate influence of the Agricultural “Cooperatives”.

    My view though is that this is still going to be very slow because

    The Japanese will save more in the face of rising prices because they become more concerned about the future, not less.
    Wages are going to shift very slowly, to be more specific, Japanese wages are going to go down in real terms. So demand is going to reduce (imo).
    If nobody applies for a job in Japan because the salary is too low, they leave the role empty.
    Salarymen can’t leave because their pay is seniority based not skill/experience etc.
    Rents must go down. There are more and more empty properties in Japan.

    Also I have my doubts about the stats of Japan. I saw something earlier that just listed Japanese productivity as 20% below the UK? But how can this be? Literally you never wait for anything in Japan. In the UK, London, the place seems to be in dire straits. Buses/Rail/Medical on strike. Police don’t investigate. In a UK supermarket there are many missing stock items, never in Japan. So I wonder if the productivity puzzle of Japan is simply that they have a no-wait culture.

    I’m not saying that Japan doesn’t face huge difficulties going forward but I think its going to be slow, and I also don’t believe that the yen is going to be so weak going forward. If you have to repatriate 6% of global debt into yen, thats going to be a strong yen going forward.

    Also I saw Fujitsu announced a big program of acquisitions and I wondered if they realised that the government is going to come after the very cash rich companies, which they have already intimated they will for the defence budget, and so are going to get out of cash savings while they can.
    All very interesting stuff. I do think in the back of my mind the contrarian view which is that the yen strengthens.

    • Flea says:

      Meanwhile Turkey is threatening Greece, the whole world is rearming ,this will end badly

    • Maximus Minimus says:

      The UK productivity advantage could be the result of the outsource-to-the-last-nail mantra. If you keep low productivity manufacturing sector, it’s going to drag down productivity.
      But then you are left with financial engineering, and the described supply problems.

    • Old Ghost says:

      When I was shopping for groceries on Friday, I did a double take on the price of bread. A large loaf of whole wheat bread has fallen from $1.55 in December to $1.09 yesterday. That seems to track the decline in bushel price of wheat from $13.00 down to $7.30. I hope a bunch of speculators got wiped out :-)

      A doz large eggs were also down about 40¢, and they had them in stock!!

      So perhaps food prices here in the USA are starting to come back down to earth ? ?

  9. perpetual perp says:

    I doubt that Japan will have the inflation the US managed to create. Since the property collapse 40 years ago, Japan has had almost zero unemployment and zero inflation. Their biggest challenge today is their ageing population. More than 90% of the businesses in Japan are small, family run businesses. Their culture is markedly different.

  10. CreditGB says:

    Seems like the powerful industrial countries are all suffering from a variety of self inflicted, and serious economic wounds, significantly weakening each from the inside, economically and politically. The exceptions being the East and India.

    Who will fill these voids in global economic and political power, and control?? Wonder if WEF has any good ideas.

    • Harvey Mushman says:

      @CreditGB,

      you should checkout Peter Zeihan’s channel on YouTube. He has lots of presentations about the end of globalization and it’s ramifications to the world’s economies. He generalizes quite a bit, but it’s pretty interesting.

      Peter Zeihan: Mapping the Collapse of Globalization

      • Anthony A. says:

        It’s starting to look like the end if the Bronze Age about 1877 B.C. when globalization ended in that area of the globe. The cause was not determined, but trade among nations at that time deteriorated and nations failed. Wars followed and poverty became the norm, but a weakened Egypt survived. Good thing they didn’t have nukes back then! LOL

    • Augustus Frost says:

      “Wonder if WEF has any good ideas.”

      You’re being sarcastic right?

      It’s the WEF types that are the architechs behind the current ongoing collapse of western civilization.

      They are either deranged or idiots, take your pick.

      • Maximus Minimus says:

        It started to go sideways with East and India.
        The WEF was just the icing on the cake.

  11. Gen Z says:

    Even “deflationary” and “future demographic crisis” Japan has double-digit inflation rates on staple foods.

    So why is the bond market in the USA and Canada pricing in lower yields for the 5-year and 10-year bonds?

    Inflation seems very hard to get rid of. Yet “the market” is anticipating lower rates, which then result in low mortgage rates and reinflating the housing bubble and stonks, or so they wished.

    • BS ini says:

      Probably the Yen Carry trade is back on with the ZIRP continuation in Japan creating a spike in the 10 year USA bond . Of course they could just park their money in 2 year treasury and achieve same but the 10year Japan bond vs 10year usd bond is easier I think

  12. Augustus Frost says:

    “And the BOJ, under the Abenomics fossil Haruki Kuroda, is clinging to the fiction that this inflation is “transitory,”

    I’m assuming it’s because Kuroda doesn’t want to “lose face”. I don’t fully understand how Japanese and East Asians apply this principle but it’s the only explanation I can come up with, other than equating him to a fool like Bernanke or Yellen.

  13. Yumi says:

    Now I am confused………..

    On 18 November you wrote that inflation here in Japan spiked by 0.6% per month from September to October.

    You also stated that this annualized at 7.4%.

    “Japan’s “core” Consumer Price Index for all items less fresh food – which the BOJ uses for its inflation targeting – jumped by 0.6% in October from September, according to data from Japan’s Statistics Bureau today. This amounts to 7.4% annualized. The 0.6% jump was the worst month-to-month jump since the consumption tax hike in April 2014.”

    Now you write that inflation is raging at 4% which is the highest that is has been since 1981.

    To me 7.4% is higher than the just released 4% annual rate.

    Does this mean that Japan is now having disinflation as the rate of inflation is slowing down from the previous 0.6 monthly increase?

    The reason that prices aren’t going up as fast as that previous month can be seen as a result of the increase in the value of the yen has increased by quite a bit from just under the 150 area to around 130 yen per US dollar. That affected a huge range of import prices.

    • Wolf Richter says:

      You’ve got to learn what “annualized” means. That would really help big time, for the rest of your life, because it’s something that crops up everywhere, including in GDP, consumer spending data, inflation, etc. etc. A lot of economic data is reported as “annualized.”

      After you’ve got that nailed down solidly, you’ve got to learn how “annualized” differs from “year-over-year.”

    • WaterDog says:

      Yumi,

      My lazy comment. (On phone, not going to research)

      .6% * 12 = 7.2% – Extrapolating a short term trend or number to full year. So, if inflation continued at this high rate it would be X% per year.

      YoY compares same month or period of time from prior year. E.g. June 2022 vs. June 2023.

      The 4% is the actual rate that occured. Some months will be higher or lower. If inflation is ticking higher than prior months were lower, yes?

      In summary: 4% is high but if inflation is *accelerating* (as shown in the monthly data) than the next full year will be even higher than previous.

  14. JX says:

    I just came back from Japan.

    300 yen get you 10 organic eggs.
    Pharmacies sell 93 yen coffee.

    they are in better shape than us.

    • Deputy Assessor says:

      I was there in November. McDonald’s was hiring at 900 yen an hour, 880 if you were a koukousei (high school student). Here, McDonald’s in small towns in California are hiring at $17 an hour. The eggs are about the same price relative to a McDonald’s starting wage, except here you’ll get two extra.

      I exchanged at 150 yen/dollar, and that’s where the bargain was.

  15. James says:

    JX

    I LIVED in Tokyo from 1989 to 1999 & have been black in Tokyo since Halloween last yr.

    Yes, 300 Yen does buy 10 organic eggs BUT I’ve never seen “Pharmacies well 93 Yen coffee.

    Is this coffee “instant coffee?” from a vending machine (outside a pharmacy? Hot coffee as a partial sample? (like from Kaldi)

    Please clarify.
    Thanks

  16. Eastwind says:

    If your country has been fighting deflation for 40 years, it doesn’t seem entirely reckless to me to make sure inflation is well entrenched before declaring victory over deflation and pivoting to reining in inflation.

    And with the debt that Japan is under, having inflation run hotter than 2% will help inflate away some of that huge debt pile. It taxes savers, but who else do you have to tax in Japan? It’s especially “good” if you can keep government bond payments low while inflation is high, because that reduces the interest payments while the inflation eats away at the principle.

    This strategy – letting inflation run hot while keeping the rates that governments pay on their debt – is precisely what is being put about as the future for all over-indebted countries. I don’t know what the people at the WEF are thinking, but I suspect this counts as ‘conventional wisdom’ to them.

    I’m looking for the US Fed to declare victory on inflation as quickly as they can, before it’s back to 2%, so that we can enter a long period of “above target” inflation. In short, there’s the official 2% target, and then there’s the whisper target, which is 4%.

    Even inflation excursions as high as 6% in the coming years will be secretly welcomed by the fed, because they can then don their inflation fighting garb and bring it back to 4% to show they’re doing their job.

    Mark my words, you won’t see inflation under 4% again this decade, and that’s they way the powers that be want it.

    I’m sure Koroda-san is tickled pink with inflation at 4%. He’ll go down in history as the man who beat deflation. Don’t hold your breath for his replacement to look to undo that.

    • Wolf Richter says:

      Eastwind,

      “If your country has been fighting deflation for 40 years…”

      Why does this BS keep getting regurgitated?? What kind of effing propaganda is this??? LOOK AT THE LAST CHART. Japan had price stability: a little inflation followed by a little deflation followed by a little inflation…. The way it’s supposed to be. I’m so sick of this braindead “deflation” BS.

      I didn’t read the rest of your comment, after the first BS line.

      Since you don’t look at the chart in the article, I’ll re-post it here.

  17. Rosebud says:

    Did you notice Kishida was in Canada January 12, asking about a staple supply of NatGas?

    What they arent telling you (directly) is Canada has a new export quickly testing Staple territory, and Japan is one of the first countries in line.

  18. Rosebud says:

    Further to this line of enquiry, Keystone Pipeline has had a reversal of sentiment amongst the USA govt. That is because Keystone is a delivery system for Bitumen. The USA staple, Bitumen.

  19. Rosebud says:

    I’m not trying to confuse anyone. All I’m saying is that right now the worlds countries are sorting out their staple requirements, either as producer or consumer. The adjustment process has lead to inflation. And I’m also restatng: there is a new staple. It was produced in the north of North America.

  20. Craig Adler says:

    I agree with you 100% I lived in Japan twice and understand the situation well. But there is one issue. Japanese retail investors are so heavily invested in JGB’s that the BOJ will do everything it can and keep printing to save those investors from losing their savings since wage increases in Japan are very small and people live basically on fixed incomes. Not sure how this will work itself out. Thoughts?

    • Wolf Richter says:

      “Japanese retail investors are so heavily invested in JGB’s that the BOJ will do everything it can and keep printing to save those investors from losing their savings”

      You have some misconceptions about bonds. That’s not how bonds work.

      1. If these savers bought their JGBs when they were issued and hold them to maturity, they will be paid face value (which is what they paid for them) and will not lose one yen, no matter what interest rates do during the period. That’s how bonds work. That’s why people like to own bonds and hold them to maturity. You really don’t care what the market does because at maturity you will be paid face value.

      2. Higher interest rates would be the best thing in the world for these saver-bondholders because they could replace maturing low-yielding bonds with much higher yielding bonds, and actually get some cash flow out of their bonds that they then could spend. This is a great thing to happen, and it is now happening in the US.

      3. It’s only speculators that can lose money on JGBs, meaning institutional investors such as hedge funds or banks that buy bonds in the market and sell bonds in the market to make trading profits. They’re often highly leveraged in these bets, some buy long, others sell short. They take big risk on bonds to make lots of money on bonds, and they can lose lots of money on bonds. Savers don’t do that.

  21. eg says:

    The meme at FT Alphaville says it all — BOJ DGAF

  22. Spencer says:

    All Japan has to do is raise their remuneration rate on IBDDs.

  23. Hairy Gaijin says:

    IMHO Japan is THE canary which due to its massive debt, domestic or otherwise , will be shocked with massive inflation sooner than later. Wages aren’t rising. Everything else is. Savings lose and lose . Granma and grandpa can’t invest on their smartphone which they don’t even have.

  24. MiTurn says:

    Great post Wolf.

    Of concurrent interest is the USD/JPY rollercoaster,

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