Japan Inc opposes central bank monetary stimulus, Reuters investigation

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Tokyo — More than 60% of Japanese companies want to end this year’s large-scale monetary easing policy due to the pain of the weak yen, and about a quarter want to take action now. Reuters research shows.

Less than a year ago, the Bank of Japan enthusiastically supported the Bank of Japan’s policies, but this year’s depreciation of the yen plunged for the first time in 20 years, causing import prices for fuel and raw materials to soar, and corporate costs alone. It also hit the home. Spending.

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The yen fell 14% from the beginning of the year, hitting a low of $ 131.34 this month.

“The depreciation of the yen above $ 125 is excessive, and policy makers need to take action in some way, including but not limited to the rate of increase,” a manager of a chemical maker said in a monthly Reuters survey. Said.

Twenty-four percent of respondents said central banks should now abandon large-scale monetary stimulus measures, and 23 percent said by the end of the first half of September.

Overall, 64% want to abolish large-scale stimulus measures by March, the end of the fiscal year, and that number will jump to 84% in April, when Haruhiko Kuroda, Governor of the Bank of Japan, serves his term.

Kuroda states that the yen is appreciating rapidly, but argues that the depreciation of the yen will benefit the economy as a whole. In stark contrast to the shift to rate hikes in other parts of the world, Kuroda also said the central bank will continue to carry out strong monetary easing, given the effects of pandemics and moderate inflation.

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Of the respondents who want to change the BOJ’s policies, 58% want to abolish negative interest rates, 35% want to raise interest rates, and 25% want to lower banks or target inflation of 2%. I want to change. Multiple answers were allowed for this question.

The results of a poll of 500 large and medium-sized non-financial companies from April 26th to May 13th were answered by 230 companies, and the survey was the last major question from July when it asked the same question about monetary policy. Represents a U-turn.

At that time, 72% of Japanese companies were positively affected by the BOJ’s policies, with a majority saying they needed to keep ultra-low interest rates for another three to four years.

The sharp depreciation of currencies outweighs the benefits associated with the normal depreciation of the yen: inflation in profits on return abroad and cheaper export capacity in the long run. Japanese exporters also continue to shift production overseas.

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“As production shifts continue, rising raw material costs and the depreciation of the yen will have a greater economic impact on the economy than other imports,” said one retailer’s manager.

Respondents will respond to the survey on condition of anonymity.

BOJ SLAMMED

Some executives have expressed concern that the depreciation of the yen could ultimately undermine Japan’s economic strength, waning to criticism of the Bank of Japan’s policies.

“The mitigation policy turned out to be nothing more than a stupid plan to weaken national power,” wrote a manager at a service company.

The survey also found that companies are wary of increased capital investment due to the impact of the weak yen and rising input costs. Nearly half plan to level off business investment this year, with an expected decline of 14%.

The survey also showed that China’s anti-COVID measures, including the blockade in Shanghai, have hurt nearly two-thirds of Japanese companies. 10% say they have a “big impact” on their business.

“Imports of Chinese-made auto parts have stopped, putting downward pressure on car production,” wrote the manager of a chemical maker.

($ 1 = 129.02 yen)

(Report by Tetsushi Tanaka, edited by David Dolan and Edwina Gibbs)