34-Year-Old Japanese Guy Reacts: BOJ PANICS Japan’s Economy Is Falling Apart

34-Year-Old Japanese Guy Reacts: BOJ PANICS Japan’s Economy Is Falling Apart

Guys, you know what I think? Maybe I’m wrong, man. Maybe like maybe nobody speaks Nobody needs to speak English in Japan, man. Nobody Nobody has to. Uh, nobody needs English in Japan, man. I mean, I I suck. I I know. I just stupid person here. So, maybe I’m I’m I’m wrong. I’m wrong. The Bank of Japan has wrapped up its two-day policy board meeting, keeping monetary policy unchanged. But it made a big downgrade in its outlook for the economy as the US tariffs have stirred up all kinds of uncertainty. So you go yeah I’m not going to claim that I know many things about economy. No right I’m not economist. I’m not god but I can tell you guys that when it comes to Japan’s economy it’s not looking great. And yeah Trump tariff it’s not great for Japan’s economy. But that’s part of it. We have to talk about fundamental issue. I hope they do here. I hope of Kushima from our business desk joins us now. So, first of all, how did the markets respond to the BOJ’s announcement? Well, currency investors uh definitely had a big reaction. The US dollar jumped against the yen, gaining more than one yen after the central bank statement came out around noon. Trader. Yes. So, so basically what’s interesting about this is that even though inflation is happening in Japan, especially Tokyo, I assume, but I think BOJ, Bank of Japan, they decided to not to raise interest rate this time around because they are worried about Japan’s economy. they should be worried about it. But again, this is why sometimes I say Japan is stuck because if you think about Japan’s inflation, which is happening right right now in Japan, Tokyo especially, they should raise interest rate because that’s how you, you know, combat inflation. Uh, you know, just just simple thing. But, you know, here’s the thing, right? Because if you do that, of course, you know, mortgage rate, you know, you know, interest rate, loans, car loans, everything it’s going to go up. So, you know, some companies might go bankrupt. Uh, you know, some people cannot pay mortgage whatever. So, yeah, it’s get it’s going to have negative effect. So BOJ is saying that hey I know inflation is happening Japan but Japan’s economy is dying it’s bad we have we cannot raise the interest rate so basically this is the thing Japan’s economy guys is so weak so weak that current interest rate which is around 1% I want to say it’s It’s it’s it’s too much right in the states like five 6% right other countries higher in Japan one 1.25 25 1.5% guys telling you 2% interest rate from BOJ that would be too much for many uh people you know companies so again Japan’s economy is so weak Trump tariff is that bad probably but again here we again in Japan they need to talk about more fundamental core issues it’s not just America you know we have to look at Japan and we have to accept the fact that Japan economy is super weak. So weak now expect the bank to hold off from raising rates longer than had been forecast. That makes the end less attractive to investors looking for better returns. Now many managers continue to buy the dollar toward the end of the day. Here’s how the pair Yeah, I mean this is good news kind of for me. I don’t know how long this going to continue because of course, you know, I’m trying to earn USD here. So for me, Japanese yen getting cheaper is always good news. American dollar appreciating against JPY is good news for me. I’m liking this, but um you know that’s just me, man. Just me. Is trading now. In the stock market, the NK gained 1.13% on the back of the weaker yen. Exporters were bought. Traders are hoping for better earnings as their proceeds usually come in dollars. Now, let’s get into the details of what the central bank had to say that rattled markets so much. Now, board members decided to continue targeting a short-term rate, guys. This guy, man. This guy, look at this guy, man. This guy, Jesus Christ, this guy. I mean, his hairline is cooked, man. It’s cook of around half a percent. Now, that reflects a cautious stance to assess how the US tariffs will affect the economy and prices. The tariffs have already created much volatility in financial markets. The bank also uh issued its quarterly outlook for the economy. It down again. I mean guys like I don’t want to you know sound you know broken um clock but it’s like you know if BOJ they think about their interest rate right interest rate based on America’s economy or policy right that means that for Japan America’s economy is so important right so humongous so important that they even changed their policy, their interest rate policy, BOJ’s Bank of Japan’s policy just because America is doing something. And I’m still today so baffled that many people they don’t study America, man. It just I’m not talking about just English, but many people they because I know this because they don’t speak English, so they don’t they can’t pay attention to what’s happening in the States. They don’t speak English. I’m not saying that everybody, everyone of Japanese should speak English. No, I don’t care. I don’t give a But you know some people economist, analyst, politician, CEOs, those people I think they should speak English because or they should understand English better because again Boj Bank of Japan they changed the whole policy just because of America you know I don’t know you know you know what I think guys maybe I’m stupid guys I’m broke. broke. I’m ugly. I got nothing. Maybe maybe those people are right, guys. I don’t know. Maybe they’re right. I mean, I’m stupid. I’m I’m an id. I’m an idiot. You know what I mean? Maybe that’s what’s happening. Maybe downgraded its GDP growth projection by a large margin from its January outlook. It also trimmed its inflation forecast. The median forecast of the policy board’s nine members was for annualized. Okay, let’s look at this guys. So for forecast this year um may know the GDP growth is from 1.1% which is it’s not even high 1% to 0.5%. uh supposed possibly nothing, right? You know, okay. Okay. Growth of 0.5% in real terms in fiscal 2025 from the previous year, but it’s far lower than the January forecast of 1.1%. For fiscal 2026, it projects growth of 0.7% down from 1%. On inflation, the BOJ expects consumer prices to rise 2.2% in fiscal 2025. That’s lower than the earlier projection of 2.4%. For fiscal 2026, the forecast is 1.7% also down. Yeah, I I don’t know when it comes to inflation that BOJ is right on this. I don’t know. But you know, as you can see here, right guys, inflation is higher than actual DDP growth. So, it’s just again I mean again Japan is getting poor. It’s just also this is kind of new to Japan because for the past 30 years inflation was not a thing in Japan it was deflation but now we have inflation right here and you know economy is going down. So like this is for a time in Japan that we’re having this issue in inflation and economic downturn both you know so great from the previous forecast. Now these downgrades reflect the view that the US trade levies will dampen exports and suppress capital investment. And here is what the BOJ governor had to say. Foreign economies are slowing due to the impact of the trade policies of various countries. That could lead to a decline in company profits in Japan. Under these circumstances, we think that even though an easy monetary policy will help support the economy, the pace of growth will slow down. It also mentioned that the bank will likely achieve its inflation target later than expected because of the fast changing global environment. Well, I talked to an economist who formerly worked at the BOJ and who has been watching monetary policy closely. Adachi Masami shared his takeaway from the BOJ’s report and explained his own outlook. This is a pause of the normalization of the economy which accompanies a pause of the uh policy normalization. That’s what we have been thinking. Okay. So, he speak English that’s something right. So in Japan when it comes to you know economist like here and business people politician his English is actually it’s pretty pretty good in Japan but you can kind of see how when it comes to Japan’s again Japan’s English ability it’s so low right so low I mean I feel like my English is better than this guy but I I don’t what do I know man I suck at everything anyway so I don’t know but again you know yeah just I don’t know. But again, like this guy uh in Japan his English is pretty high. Uh it’s it’s much better than other people. Yeah. For a while after the beginning of April and but the risk uh to the downside is probably dominant at the moment. Therefore, our view is that the BOJ pause uh of the rate hike is quite long time, two years until mid 2027. So can you elaborate on why you think the BOJ’s rate hike next time will be in 2027? It’s not just a tariff itself. It’s a tariff is there raising the inflation in the US and probably consumption will slow down. That’s a direct impact of this tariff policy. But because of the uh how the uh Trump administration implement this tariff policy what I mean like you know I don’t know like I feel like if again you know uh tariff is so high in the states right I feel like many product are going to go to different countries like Japan so maybe that’s why they they don’t they feel like they don’t have to raise interest rates in Japan because inflation is going to be better in the future because uh because you know let’s say from China, uh Taiwan, Vietnam and any other countries, they will ship product to to other countries instead of the of America. Is that what they’re saying? I mean, maybe. But, you know, which is likely to uh link to the trade war between China and the US. That’s definitely makes the people quite nervous on what’s going to happen next. So I mean under such a high uncertainty you know it’s very normal to expect the corporate to stop the new businesses new investment new hiring yeah again again I mean he’s I’m assuming top you know economist right and again he’s again he’s when it comes to pronunciation accent fine again not not great but fine but again like when I listen to his talk. I don’t know. I mean, like I kind of understand it, but I’m like I want to kind of say what’s what’s your point, you know? Just I don’t know. So, like again, I think again, guys, you know what I think? Maybe I’m wrong, man. Maybe like maybe nobody speaks nobody needs to speak English in Japan, man. Nobody nobody has to. Uh nobody needs English in Japan, man. I mean, I I suck. I I know. I just stupid person here. So maybe I’m I’m I’m wrong. I’m wrong. Adachi says in the current global environment, the BOJ should be taking a different approach. Right. Uh question at the moment for the BOJ is are you ready to cut the rate? Are you ready to ease the policy under this downside risks? But uh the reason why BOJ doesn’t tell that is because I believe you know there’s a huge implicit pressure from the US side that Japan is not manipulating and to depreciate. So uh despite the such a high uncertainty which accompanies a huge downside risk to the economy and the inflation BOJ is maintaining the relatively hish stance by saying that we yeah again I mean I don’t does he know like what this means I don’t know man and also I I again I don’t know but uh when it comes to why would BOJ cut interest rate now I don’t understand why why so like again If that’s the case guys, if this guy you know this guy is promoting that uh hey BOJ should cut the interest rate that means that again guys Japan’s economy is so weak because guys Japan’s like when it comes to Bank of Japan’s interest rate now it’s like 1.25% you know whatever right around there one or one. to 5%. So, it’s low and he’s saying they should cut it. I mean, I don’t I mean maybe, but it’s just again that means that Japan’s economy, it’s going to be so bad. We need money again. Money, money, money. Print money. Easy money. We need money. That’s what he’s saying, right? Again, when does that work, man? Just print money, give people money, more money, money, money. When does that work? I don’t understand. I mean, again, that’s showing that Japan’s economy is so weak that even now also inflation is happening. By the way, uh this guy thinks we should cut the interest rate. Our next policy change is rate hike, not the cut. What is your outlook for Japan’s economy in the near to midterm? I think the downside risk to the Japanese economy is more significant than what the BOJ expecting. As you probably know, BOJ’s uh new uh GDP forecast for fiscal year 2025 which started uh in April is 0.5%. But we are expecting basically zero and the 2026 0.7 after the stagnation in 2025. So you’re expecting stagnation in Japan’s economy in 2025. Our UBS uh US colleagues are expecting a outright recession uh two consecutive quarter of the contraction of the GDP in second half of the year right in the US and that will be a accompanied a huge contraction of imports. So that means export of Japan will contract significantly in the second half this year and as the BOJ mentioned that will make the corporate profit decline. So domestic demand will slow with this dynamics. Adaj told me he has one of the more pessimistic views of Japan’s economy but the way he sees it both the market and his fellow economists are being too optimistic. It’ll be interesting to see how things Anyway guys, I think that economist I think he was right that um many people are too positive about economy. Yeah, I think so. It’s going to be bad. But again, the problem is that we have no idea when we have no plans. Like he’s saying we should cut the interest rate. Okay, in the past we did that, right? Some people call that abonomics, whatever. We did that. We did 0% interest rate for many years and also we did negative interest rate too. Negative interest rate. We did that. What happened? Nothing, guys. Nothing. Right? We’re delaying this inevitables which is this Japan as country we know it right this country is gonna die that’s that’s inevitable right I mean again he’s no wrong that Japan’s economy is most likely is going to have harder time this year and next year he’s right but again the problem is that even this guy right I don’t know anything about the economy I’m G I don’t know what’s happening but this guy chief economist of whatever he has no idea no plan right only thing he said was that BOJ should cut the interest rate that’s it that’s the plan right again guys telling you Japan’s economy I think it’s going to be so bad and next year it’s going to be worse, worse, and the worse and the worse. Who has the plan? Nobody, man.

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