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Positive Yen Data Brushed Aside

By Kathy Lien
19 July 2005 22:01 GMT
Although results weren’t as rosy for the leading indicators in May, the figure hovers just below the 40 percent reading in the month prior, suggestive of nothing earth shattering.  What did grab the focus of market participants was the notion that policy makers may indeed be slowly moving to tighten monetary policy as earlier speculated.  According to the most recent Bank of Japan meeting minutes, considerations of lowering the target reserves set by the central bank were brought to the table.  Lowering the reserve target to between 27 trillion and 32 trillion yen would effectively restrict the amount of cash reserves available to lenders, and thus the economy as whole.  However, the notion was short lived against an overwhelming majority vote as concerns over the sustainability of the economy remained.  Although this does, for the most part, put to rest any formidable speculation on definite policy tightening plans by the BOJ, hope does still linger.  As mentioned before, further confirmation of rising consumption may be needed to make optimism a reality.

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19 July 2005 22:01 GMT