The Star Online: World Updates
The Star Online: World Updates |
- Japan PM sets inflation goal; next on list, a new Bank of Japan governor
- Honduran Congress approves impeachment tool after Zelaya debacle
- North Korea says will boost nuclear deterrent after U.N. rebuke
| Japan PM sets inflation goal; next on list, a new Bank of Japan governor Posted: 22 Jan 2013 08:18 PM PST TOKYO (Reuters) - After pressuring Japan's central bank into overhauling monetary policy, Prime Minister Shinzo Abe declared the change "epoch making". Next on his to-do list: find a central bank chief more sympathetic to his views than the current governor.
In its most determined effort yet to end years of economic stagnation, the Bank of Japan said on Tuesday it would switch to an open-ended commitment to buying assets next year and double its inflation target to 2 percent. It issued a joint statement with the government promising to reach the inflation goal "at the earliest possible time," drawing praise from Abe who had piled relentless pressure on the central bank to take bolder measures to pull Japan out of deflation and recession. Although the scale of the measures was greater than markets had expected, investors were disappointed the open-ended buying, similar to a U.S. Federal Reserve policy, would not begin until 2014. That suggested no extra stimulus measures this year. But Bernd Berg, global currency strategist at Credit Suisse, suggested markets would soon switch their focus to the next stage of Abe's plan and that would keep the yen on a weakening path, a trend that has bolstered the stock market. "The general upward move in dollar/yen will continue due to expectations of more easing after a new BOJ governor is appointed in April," he said. Abe led his Liberal Democratic Party to a landslide victory in December elections and his campaign for aggressive budget and monetary stimulus had pushed the yen lower and sparked a stock market rally on hopes a weaker currency would boost exports. He hailed Tuesday's BOJ action as a game-changer. "It is 'epoch-making' in a sense of a bold review of monetary policy," he told reporters. Masaaki Shirakawa's term as central bank governor ends in just over two months. He has faced persistent pressure from lawmakers to do more with monetary policy to lift the economy as recent governments steadily built up massive debts, limiting the room for fiscal expansion. But he has resisted, insisting monetary policy alone can only have a limited impact against the deflation that has come to define just over a decade of economic stagnation in Japan. Pumping unlimited amounts of cash into the banking system or underwriting government debt, solutions pushed by critics, could thrust Japan into a financial crisis, he has maintained. Many analysts expect Abe to pressure the BOJ for yet more action, especially in the run-up to upper house elections expected in July. The 2 percent inflation target gives him the stick he can use to beat the BOJ for more policy easing. Japan has only achieved 2 percent inflation in a handful of months since the late 1990s. "If this means they always need to do something until inflation rises to 2 percent, they would need to ease every month," said Katsutoshi Inadome, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities. MORE ACTION EXPECTED Abe has made clear that he wants a BOJ governor who shares his push to reflate the economy with a hyper-easy monetary policy combined with big fiscal spending. Such a job would suit Toshiro Muto, a former finance ministry official and former deputy governor at the BOJ, said Isao Iijima, a political strategist for Abe. Experience at the Finance Ministry's budget bureau and strong connections in the world of finance and politics will be vital for the next BOJ governor, Iijima said. "That's why, if I'm to be honest, I think that a former finance ministry official would be best," he told Reuters. "For example, Muto. Kazumasa Iwata, a former government economist who served as deputy BOJ governor until 2008, has also been mooted as a possible Shirakawa replacement. He has consistently called for bolder monetary stimulus to beat deflation. The next policy options include scrapping the 0.1 percent floor the BOJ sets for short-term interest rates to encourage more lending and the central bank buying longer-duration bonds. "I think the BOJ and the next governor after Shirakawa are likely to be asked or expected to hammer out bolder measures," said Mitsushige Akino, executive director and chief fund manager at Ichiyoshi Asset Management in Tokyo. Analysts generally agree BOJ action alone won't reinflate the economy. For its part, the cabinet this month approved about $117 billion (73.9 billion pounds) of spending in Japan's biggest stimulus since the global financial crisis. But many economists say the combined measures will provide only a temporary boost unless the government follows through with politically more difficult economic reforms such as deregulating its protected farming sector. (The story has been refiled to fix the headline) (Additionally reporting by Hideyuki Sano, Stanley White and Kaori Kaneko; Writing by Neil Fullick; Editing by Ruth Pitchford) Copyright © 2013 Reuters | ||
| Honduran Congress approves impeachment tool after Zelaya debacle Posted: 22 Jan 2013 07:39 PM PST Tegucigalpa (Reuters) - Honduras' Congress on Tuesday approved a measure that allows senior political officials including the president to be prosecuted and removed from office, lawmakers said.
The impeachment mechanism is aimed at avoiding crises such as the one that erupted in the Central American country in 2009, when former President Manuel Zelaya was overthrown in a military coup. "Impeachment keeps us from falling into a terrible conflict like the one in 2009, whose consequences were devastating not only economically, but socially," said National Congress president Juan Hernandez. In 2009, Congress removed Zelaya after the military arrested him at his home and sent him to Costa Rica. Zelaya's critics said he was manoeuvring to remain in power beyond his term in office. Congress, which was dominated at the time by the conservative Liberal and National parties, supported the military coup against Zelaya, and approved a no-confidence vote, but lacked an authorization procedure for his dismissal. Legislation authorizing impeachment must still be approved by the incoming Congress, which will begin on Friday. Copyright © 2013 Reuters | ||
| North Korea says will boost nuclear deterrent after U.N. rebuke Posted: 22 Jan 2013 07:25 PM PST UNITED NATIONS (Reuters) - The U.N. Security Council on Tuesday unanimously condemned North Korea's December rocket launch and expanded existing U.N. sanctions, eliciting a vow from Pyongyang to boost the North's military and nuclear capabilities.
While the resolution approved by the 15-nation council does not impose new sanctions on Pyongyang, diplomats said Beijing's support for it was a significant diplomatic blow to Pyongyang. The resolution said the council "deplores the violations" by North Korea of its previous resolutions, which banned Pyongyang from conducting further ballistic missile and nuclear tests and from importing materials and technology for those programs. It also said the council "expresses its determination to take significant action in the event of a further DPRK (North Korean) launch or nuclear test". North Korea reacted quickly, saying it would hold no more talks on the de-nuclearization of the Korean peninsula and would boost its military and nuclear capabilities. "We will take measures to boost and strengthen our defensive military power including nuclear deterrence," its Foreign Ministry said in a statement carried by state news agency KCNA. Six-party talks aimed at halting North Korea's nuclear program have involved North Korea, the United States, China, Japan, Russia and South Korea. They have been held intermittently since 2003 but have stalled since 2008. South Korea says the North is technically ready for a third nuclear test, and satellite images show it is actively working on its nuclear site. However, political analysts said they viewed a test as unlikely in the near-term. "North Korea will likely take a sequenced strategy where the first stage response would be more militarily aggressive actions like another missile launch," said Yang Moo-jin of the University of North Korean Studies in Seoul. There are concerns that North Korea could stage a test using highly enriched uranium for the first time, which would give it a second path to a nuclear bomb and enable it to preserve its stocks of plutonium, which are believed to be sufficient for about 12 nuclear devices. The U.N. resolution added six North Korean entities, including Pyongyang's space agency, the Korean Committee for Space Technology, and the man heading it, Paek Chang-ho, to an existing U.N. blacklist. BLACKLISTED The firms and individuals will all face an international asset freeze, while Paek and the others blacklisted by Tuesday's resolution -- the manager of the rocket launch centre and two North Korean banking officials -- will face a global travel ban. In addition to the space agency, the council blacklisted the Bank of East Land, Korea Kumryong Trading Corp., Tosong Technology Trading Corp., Korea Ryonha Machinery Joint Venture Corp., and Leader (Hong Kong) International. Leader, based in Hong Kong, is an agent for KOMID, a North Korean mining and trading company that was sanctioned in 2009 and is the North's main arms dealer, the resolution said. U.S. Ambassador to the United Nations Susan Rice welcomed the resolution, describing it as introducing "new sanctions" against North Korea. "This resolution demonstrates to North Korea that there are unanimous and significant consequences for its flagrant violation of its obligations under previous resolutions," she said. Other diplomats, however, said on condition of anonymity that saying the measures in Tuesday's resolution were new sanctions would be an exaggeration. China, the North's only major diplomatic ally, said on Monday the Security Council needed to pass a cautious resolution on North Korea, adding that this was the best way to ensure regional tensions did not escalate further. Chinese Ambassador Li Baodong said certain elements in the resolution's original draft, which in China's view would "jeopardize" normal trade between North Korea and other countries, had been removed, the official Xinhua news agency reported. "Sanctions and resolutions alone do not work," Xinhua quoted him as saying. "Resolutions must be completed and supplemented by diplomatic efforts." Several diplomats said Beijing's decision to back the resolution sent a strong message to Pyongyang. "It might not be much, but the Chinese move is significant," a council diplomat told Reuters. "The prospect of a (new) nuclear test might have been a game changer (for China)." The United States had wanted to punish North Korea for the rocket launch with a Security Council resolution that imposed entirely new sanctions against Pyongyang, but Beijing rejected that option. China agreed to U.N. sanctions against Pyongyang after North Korea's 2006 and 2009 nuclear tests. December's successful long-range rocket launch, the first to put a satellite in orbit, was a coup for North Korea's young leader, Kim Jong-un. North and South Korea are still technically at war because their 1950-53 conflict ended in a truce, not a treaty. (Additional reporting by Jumin Park and David Chance in SEOUL, and Ben Blanchard in BEIJING; Editing by Paul Tait) Copyright © 2013 Reuters |
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