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Nikkei to Bank of Japan: Pay attention to consumer sentiment

October 12, 2007
By Ken Worsley


Last night I wrote a quick piece in which I expressed amazement that the BOJ monthly economic report made no mention of declining consumer prices, consumer confidence, or the disappointing results of the BOJ’s most recent Standard of Living survey.

In today’s Nikkei, this headline appeared: INSIDE VIEW: BOJ Must Pay More Attention To Consumer Sentiment

I’ll have to run through the server logs to see whose job I’m making easier…just kidding. What I think this shows is the obvious hugeness of the blinders that BOJ governors are wearing. The fact that the Nikkei is reporting on it adds quite a bit of legitimacy to the idea that the BOJ’s approach - focusing on sentiment at large manufacturers in the belief that there will be a ‘trickle down’ effect - is deeply flawed. As the Nikkei presciently put it:

[T]he economic outlook grows darker when consumer sentiment weakens. The index of leading indicators for major industrial economies, calculated by the Organization for Economic Cooperation and Development, is used to analyze cyclical changes in economic activity. It shows that the Japanese economy began to weaken in April 2006, or one month after the BOJ ended its quantitative easy money policy.

Would that not be historically in line with what one might expect?

Filed Under Bank of Japan, Monetary Policy 

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Comments

3 Responses to “Nikkei to Bank of Japan: Pay attention to consumer sentiment”

  1. John S on October 12th, 2007 4:04 pm

    So how long have you had the Nikkei gig?

  2. Ken Worsley on October 12th, 2007 5:14 pm

    Ha ha John. Don’t be ridiculous.

  3. Make it nine straight months: Core consumer price index falls again in September : Japan Economy News & Blog on December 2nd, 2007 11:22 pm

    […] go unnoticed the Bank of Japan’s policy board? The Nikkei has already exhorted the bank to pay more attention to consumer sentiment in determining its policy on interest rate hikes, although some BOJ members have remained bullish in their statements supporting another rate hike […]

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