Submitted by Jeffrey Snider via Alhambra Investment Partners,
With both the Bank of Japan and Federal Reserve this week undertaking policy considerations at the same time, it is useful to highlight the similarities of conditions if not exactly in time. As I wrote this morning, what the Fed is attempting now is very nearly the same as what the Bank of Japan did ten years ago. In the middle of 2006, after more than six years of ZIRP and five years of several QE’s, the Bank of Japan judged economic conditions sufficiently positive to begin the process of policy ‘exit’ by first undertaking the rate ‘liftoff.’
If you read through the policy statement from July 2006 it sounds as if it were written by American central bank officials in July 2016. Swap out the year and the country and you really wouldn’t be able to tell the difference.
Japan’s economy continues to expand moderately, with domestic and external demand and also the corporate and household sectors well in balance. The economy is likely to expand for a sustained period… The year-on-year rate of change in consumer prices is projected to continue to follow a positive trend. With incoming data judged as meeting predetermined criteria (they were somewhat ‘data dependent’, too), the Bank of Japan voted to raise their benchmark short-term rate but were careful, just like the Fed since December, to assure ‘markets’ that it would be a gradual change only in the level of further ‘accommodation.’
This post was published at Zero Hedge on Sep 23, 2016.