Note: This post was supposed to have been put up yesterday but was delayed because of problems with Blogger.
China has tightened monetary policy again. AFP/CNA reports:
China's central bank on Thursday said it would raise the amount of money that lenders must keep in reserve as official concerns persist over inflation and rising housing costs.
The People's Bank of China said it would raise its reserve requirement ratio by 0.50 percentage points, effective May 18 - the fifth such hike this year.
When the new reserve ratio requirement takes effect, China's commercial banks will be required to hold 21 per cent of their deposits in reserve, based on earlier announcements made by the bank.
Japan, in contrast, is far from any monetary policy tightening after data on Thursday showed a sharp plunge in exports in March. AFP/CNA reports:
Japan's current account surplus in March shrank 34.3 per cent from a year earlier, data showed Thursday, underlining the impact of a devastating quake and tsunami on the world's third-largest economy.
The plunge in the surplus followed a 3.0 per cent rise in February...
Thursday's data showed that Japan's trade surplus tumbled by 77.9 per cent to 240.3 billion yen with exports falling 1.4 per cent despite a 16.6 per cent rise in imports.
The finance ministry also said in a separate report Thursday that Japan fell into a trade deficit in the first 20 days of April.
Japan ran a deficit of 786.8 billion yen for the 20 days, reversing a surplus of 154.6 billion yen in the same period last year.
Exports fell 12.7 per cent year-on-year, the sharpest fall since October 1-20 in 2009, while imports rose 14.2 per cent.
Data from Japan on Wednesday had also shown a weak economy in March. From Reuters:
Japan's index of coincident economic indicators fell a preliminary 3.2 points in March from February, the Cabinet Office said on Wednesday, after the March 11 earthquake and tsunami damaged factory output and triggered a nuclear crisis...
The index of leading economic indicators, compiled using data such as the number of job offers and consumer sentiment and a gauge of the economy a few months ahead, fell 4.5 points from February.
But the economy may have stabilised somewhat in April. Again from Reuters:
Japan's service sector sentiment index rose to 28.3 in April, a Cabinet Office survey showed on Thursday, improving from a record fall posted the previous month, helped by efforts to repair supply constraints, prevent power shortages and contain a nuclear crisis caused by the March earthquake and tsunami.
The survey of workers such as taxi drivers, hotel workers and restaurant staff -- called "economy watchers" for their proximity to consumer and retail trends -- showed their confidence about current economic conditions rose from 27.7 in March...
The outlook index, indicating the level of confidence in future conditions, was at 38.4, up from 26.6 in March.
In any case, the Japanese economy is unlikely to get much more help from the Bank of Japan. From Bloomberg:
With his nation’s economy contracting under disaster damage of as much as 25 trillion yen ($310 billion), Bank of Japan Governor Masaaki Shirakawa is signaling that his biggest worry is inflation.
At stake for the student of Milton Friedman is protecting the bank’s independence from financing public spending, as urged by lawmakers after the record March 11 earthquake. Shirakawa, 61, instead oversaw a 40-trillion yen boost in short-term funds, eschewing the scale of longer-dated asset purchases the Federal Reserve mounted after confidence in credit markets collapsed and the U.S. entered its worst recession since the Great Depression.
Apparently, many don't agree with Shirakawa's parsimony.
The governor gets mixed results in a survey of Bloomberg users this month. While 50 percent of respondents said the BOJ’s stance is appropriate, Shirakawa was behind Fed Chairman Ben S. Bernanke, European Central Bank Chairman Jean-Claude Trichet and Bank of England Governor Mervyn King in a ranking of who did the best job managing their region’s crisis. He got 9 percent of votes, versus 42 percent for Bernanke. Shirakawa’s favorability rating rose to 44 percent from 31 percent in October 2009.
He's certainly not getting the same adulation that "maestro" Alan Greenspan received when the latter was Fed chief.
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