Bank of Japan reports: Monetary supply and regional economic data

January 14, 2007
By Ken Worsley

Monetary Supply
On January 11, Japan’s December Monetary Supply report was released by the Bank of Japan. M2 plus CDs, the most widely watched indicator of monetary supply, rose 0.8 percent year-on-year in December, in line with projections. Following a 0.7 percent gain in the previous month, the BOJ is looking hawkish on an interest rate increase at its meetings this week.

An M2 plus CDs index covers cash in circulation, ordinary bank deposits, time deposits and certificates of deposit.

The narrower M1 index fell 0.2 percent (year on year) in December.

Holdings in Certificates of deposit (CDs) increased 5.1 percent in December.

On Sunday, Economic and fiscal policy minister Hiroko Ota said that raising interest rates would be a bad idea:

‘The Japanese economy is currently facing an extremely important period as it is at a crucial stage to test whether it can depart from deflation. I would like the BOJ to explain what kind of path the economy would follow to depart from deflation,’ Ota said on a TV Asahi program, while emphasizing the decision on interest rates is left up to the BOJ.

Italics added. Sure, it’s ‘up to’ the BOJ, but there will be some interesting lunches going on in the early part of this week.

Regional Economic Report

The Bank of Japan also released its January 2007 regional economic report on January 12, which discusses consumer spending (and other topics) by region. Short and to the point, it’s a must read. Consumer spending in Kanto, the area including Tokyo, is, “On a gradual increasing trend,” while, “The employment situation continues to improve,” and, “Household income continues to increase gradually.”

Filed Under Bank of Japan, Consumer Spending, Economics