The BOJ Speaks Volumes
The BOJ voted 8-1, Mizuno dissenting, to keep their key rate at 0.5%. Full Statement
We couldn't have said it better:
"If, the (US) housing correction intensifies or the negative effects of the disruptions in financial markets become unexpectedly widespread...
private consumption and business fixed investment may fall below expectations through negative wealth effects, the credit tightening...
and deterioration in business and consumer sentiment, and this may lead to further deceleration in growth of the U.S. economy.
The European economy is likely to continue to expand...
but possible adverse effects on financial conditions of global financial market disruptions may pose a downside risk.
If these risks related to the U.S. and European economies were to materialize and have significant adverse effects...
growth in other parts of the world may be hampered and this could cause global economic growth to be weaker than expected.
If greater assertiveness (financial and economic activity) should be based on optimistic assumptions regarding...
future sales and profits, financing costs, foreign exchange rates, and asset prices, the result could well be a misallocation of resources in the long run...
as agents become over-extended in financial markets or pour funds and other resources into inefficient economic activities.
Such behavior may push up economic growth and asset prices in the short run, but lead to later downward adjustments and hamper the sustainability of economic growth.
The recent volatility in global financial markets could be regarded as an example of...
laxity in risk evaluation under the continued benign global economic and financial environment being reversed by market forces of self-correction.
We couldn't have said it better:
"If, the (US) housing correction intensifies or the negative effects of the disruptions in financial markets become unexpectedly widespread...
private consumption and business fixed investment may fall below expectations through negative wealth effects, the credit tightening...
and deterioration in business and consumer sentiment, and this may lead to further deceleration in growth of the U.S. economy.
The European economy is likely to continue to expand...
but possible adverse effects on financial conditions of global financial market disruptions may pose a downside risk.
If these risks related to the U.S. and European economies were to materialize and have significant adverse effects...
growth in other parts of the world may be hampered and this could cause global economic growth to be weaker than expected.
If greater assertiveness (financial and economic activity) should be based on optimistic assumptions regarding...
future sales and profits, financing costs, foreign exchange rates, and asset prices, the result could well be a misallocation of resources in the long run...
as agents become over-extended in financial markets or pour funds and other resources into inefficient economic activities.
Such behavior may push up economic growth and asset prices in the short run, but lead to later downward adjustments and hamper the sustainability of economic growth.
The recent volatility in global financial markets could be regarded as an example of...
laxity in risk evaluation under the continued benign global economic and financial environment being reversed by market forces of self-correction.
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