Monday, February 11, 2013

Japan Economic Minister Calls for Nikkei 13,000

Will March 19th be the day the Bank of Japan fires up its printing presses? The BOJ's current governor, Masaaki Shirakawa, recently announced that he will resign on March 19th, three weeks before his term officially ends. Shirakawa said that he will leave along with two of his deputies, whose terms end on March 19th. 

Shirakawa has rejected repeated demands from Japan's Prime Minister Shinzo Abe to ease the BOJ’s monetary policy. Shirakawa’s departure gives Abe the opportunity to choose a replacement who will comply with his policy requests. 

How aggressively will the next BOJ governor ease monetary policy? If the remarks from Japan’s economic minister, Akira Amari, are any indication of what government officials are expecting of the BOJ, then we might see significant monetary easing, pronto. Amari recently called for the government to push the Nikkei to 13,000, some 13% higher than where the index stands today. “It will be important to show our mettle to see the Nikkei reach 13,000 by the end of the fiscal year,” Amari said. Amari further stated that the government wants policy steps “to help stock prices rise.” 

The Nikkei has soared nearly 32% in the past three months on expectations of BOJ action.

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