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Extraction Summary
1
People
6
Organizations
1
Locations
3
Events
0
Relationships
3
Quotes
Document Information
Type:
Economic analysis report
File Size:
Summary
This document is an economic analysis report titled 'Japan Economics Viewpoint' by Bank of America Merrill Lynch, dated November 18, 2016. The report analyzes Japan's monetary policy, predicting that a shift by the Bank of Japan will lead to higher inflation and wage growth in 2017-2018. The document contains no information related to Jeffrey Epstein; the footer 'HOUSE_OVERSIGHT_014412' suggests it was an exhibit in a congressional investigation, which may be why it was grouped with unrelated case files.
People (1)
| Name | Role | Context |
|---|---|---|
| Shinzo Abe | Former Prime Minister of Japan |
Mentioned implicitly through the term 'Abenomics', his economic policies, which are referenced in a chart about job g...
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Organizations (6)
| Name | Type | Context |
|---|---|---|
| Bank of America Merrill Lynch |
Author of the report, as indicated by the logo and source lines.
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| BoJ (Bank of Japan) |
The central subject of the monetary policy analysis.
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| JCER (Japan Center for Economic Research) |
Cited as the source for 'Consensus' data in Chart 7.
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| MHLW (Ministry of Health, Labour and Welfare, Japan) |
Cited as a data source for Chart 8 on wage growth.
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| MIA (Ministry of Internal Affairs and Communications, Japan) |
Cited as a data source for Charts 6, 8, and 9.
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| U.S. House Committee on Oversight |
Inferred from the Bates stamp 'HOUSE_OVERSIGHT_014412' in the footer, suggesting the document was part of evidence or...
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Timeline (3 events)
2016
The Bank of Japan (BoJ) transitioned its monetary policy to yield-curve targeting.
Japan
BoJ
2017-2018
Bank of America Merrill Lynch forecasts an increase in Japan's core inflation and wage growth.
Japan
c. 2012-2020
Implementation of 'Abenomics', a set of economic policies advocated by Shinzō Abe, mentioned in the context of accelerating full-time job growth.
Japan
Locations (1)
| Location | Context |
|---|---|
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The entire report is an economic analysis of Japan.
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Key Quotes (3)
"Policy headwinds are also abating: for the first time since 2013, both fiscal and monetary policy are poised to turn stimulatory in 2017."Source
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Quote #1
"The BoJ's transition to yield-curve targeting ensures that real yields will drop as inflation picks up, implying that financial conditions will turn increasingly loose as the recovery progresses."Source
HOUSE_OVERSIGHT_014412.jpg
Quote #2
"We are bullish on all three factors and see CY17 core inflation running at an above-consensus 1.0% and 1.4% in CY18."Source
HOUSE_OVERSIGHT_014412.jpg
Quote #3
Full Extracted Text
Complete text extracted from the document (3,029 characters)
Automatic easing
Policy headwinds are also abating: for the first time since 2013, both fiscal and monetary policy are poised to turn stimulatory in 2017.
Policy headwinds are also abating: for the first time since 2013, both fiscal and monetary policy are poised to turn stimulatory in 2017.
Monetary policy: BoJ pegs to zero
The BoJ's transition to yield-curve targeting ensures that real yields will drop as inflation picks up, implying that financial conditions will turn increasingly loose as the recovery progresses. There are good reasons to be cautiously optimistic: after all, despite a triple whammy of weak domestic demand, weak commodity prices, and a stronger yen, Japanese inflation measures are showing early signs of bottoming out (Chart 6).
The BoJ's transition to yield-curve targeting ensures that real yields will drop as inflation picks up, implying that financial conditions will turn increasingly loose as the recovery progresses. There are good reasons to be cautiously optimistic: after all, despite a triple whammy of weak domestic demand, weak commodity prices, and a stronger yen, Japanese inflation measures are showing early signs of bottoming out (Chart 6).
We expect Japan-style core inflation (CPI ex fresh food) to trough in Q4 CY16, after which it should accelerate relatively quickly in the first two quarters of 2017 in response to 1) a recovery in crude oil prices, 2) a weaker yen (we assume USDJPY rebounds to 120 by the end of the year), and 3) stronger wage growth. This also implies stronger core-core inflation (CPI ex food & energy). We are bullish on all three factors and see CY17 core inflation running at an above-consensus 1.0% and 1.4% in CY18.
This is still short of the central bank's 2% target (Chart 7). But we believe there will be little pressure to lower rates further, especially against the backdrop of a weakening yen and rising global yields. More broadly, things are moving in the right direction for the BoJ. The private sector has been steadily re-leveraging, albeit gradually. Meanwhile, labor markets continue to tighten and wage growth is slowly improving: the 4-quarter moving average for hourly wages is now up to 1.2% y-o-y (Chart 8). With the labor market for lower-cost part-time workers nearing saturation, growth in higher-quality, full-time jobs is picking up (Chart 9). We expect a moderation in employment gains and faster wage growth ahead.
Chart 6: Produce and consumer price inflation (ex-tax effect)
4
2
0
-2
-4
-6
2011 2012 2013 2014 2015 2016
1.0
0.5
0.0
-0.5
-1.0
-1.5
-Corporate goods prices %YoY (LHS)
-Headline CPI %YoY (LHS)
-Corporate service prices %YoY (RHS)
Source: BofA Merrill Lynch Global Research, MIA
4
2
0
-2
-4
-6
2011 2012 2013 2014 2015 2016
1.0
0.5
0.0
-0.5
-1.0
-1.5
-Corporate goods prices %YoY (LHS)
-Headline CPI %YoY (LHS)
-Corporate service prices %YoY (RHS)
Source: BofA Merrill Lynch Global Research, MIA
Chart 7: Japan-style core inflation (CPI ex fresh food) forecasts (FY basis)
2.0
1.0
0.0
-1.0
-2.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
-BoJ
-BofAML
-Consensus
- - Target
Source: BofA Merrill Lynch Global Research, BoJ, JCER *Consensus is JCER ESP survey
2.0
1.0
0.0
-1.0
-2.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
-BoJ
-BofAML
-Consensus
- - Target
Source: BofA Merrill Lynch Global Research, BoJ, JCER *Consensus is JCER ESP survey
Chart 8: Wage growth is picking up on the back of tight labor markets
2
1
0
-1
-2
-3
2000 2002 2004 2006 2008 2010 2012 2014 2016
-Hourly wages, %YoY 4qtr ma
-US-style core inflation (ex-tax), %YoY 4qtr ma
Source: BofA Merrill Lynch Global Research, MHLW, MIA
2
1
0
-1
-2
-3
2000 2002 2004 2006 2008 2010 2012 2014 2016
-Hourly wages, %YoY 4qtr ma
-US-style core inflation (ex-tax), %YoY 4qtr ma
Source: BofA Merrill Lynch Global Research, MHLW, MIA
Chart 9: Full-time job growth is accelerating
Abenomics
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
2000 2002 2004 2006 2008 2010 2012 2014 2016
-Part-time, ppt contribution
-Full-time, ppt contribution
-Total employment, %YoY
Source: BofA Merrill Lynch Global Research, MIA
Abenomics
3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0
2000 2002 2004 2006 2008 2010 2012 2014 2016
-Part-time, ppt contribution
-Full-time, ppt contribution
-Total employment, %YoY
Source: BofA Merrill Lynch Global Research, MIA
Bank of America
Merrill Lynch
Merrill Lynch
Japan Economics Viewpoint | 18 November 2016 3
HOUSE_OVERSIGHT_014412
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