We have ed Rodgers with US chief executive officer and c i O at Rogers investment advisors. So the Bank of Japan won't raise rates a long time down the road, probably a tweak in policy. I suppose it's possible. It seems the consensus today is that they'll stand pat in most areas. What might we learn though from the commentary at good morning or I guess good evening for you guys. Thanks very much for having me back on the show. Um. Yeah, no one expects any fireworks on the actual BOJ decision.
Of course, we expect the markets. Sorry, the rates today unchanged. That's really as as expected. I think the interesting thing to think about here, though, is the environment around what else is going on in Asia related to rates? What is China going to do once uh, you know, the full impact the medical impact of the COVID unwind becomes clear that sorry, the zero COVID UH policy unwined becomes clear.
That could drive significant action the Fed. Are they going to tinue to back pedal a little bit and ease off? Yes or no? Um, there's are the kind of a bigger picture questions about rates. I think, okay, well, there are a lot of variables there, and particularly when it comes to China, how do you see this UH path out of COVID unfolding over the next couple of quarters.
I are look, my my view is that it's going to be very difficult for China UH and and the for China, the tradeoff in you know, public policy and financial support versus you know, medical UH safety is going to be a real big issue here. So the worst that China suffers medically, if you will, in terms of fatalities and illnesses and significant illnessis the more pressure there will be to be accommodative and provide easy money and stimulus and make life look better on the economic front.
And I think that could become quite severe frankly over the next two months. We had this Kyoto news report earlier this week, and I guess is so the weekends matter day about possible revisions to the arrangement the accord between the government and the Bank of Japan. UM. It got denied by by the government, UM, but it did it did actually draw a lot of attention in the market, and it did spark quite a lot of buying of the of the yen. Since this reversed, do you put
much stock in that. I think the things that will move the markets first of all yen, and it's moved a bit, but it's not been a dramatic move. Frankly, we're still hovering around one is arranged. It's it's not been a dramatic move. I think the bigger thing to watch in Japan is what sort of money will be spent by the government on this rearmament policy. And that is a multi year project and it's a frankly of
vital national security issue ever since Russia invaded Ukraine. Uh, you know, my view, our our firm view is that this is a moment of singular importance to Japan. It's it's similar to commodore perry sailing into Tokyo Bay in eighteen fifty three. Everything now changes from Japan for Japan going forward, and that clearly the immediate response on the on the military rearmament is just a first step, but that will have a significant impact, dramatic impact, far more
than just global inflationary concerns. I hate to ask a mundane follow up because you're talking about you know, monumental implications from it, but is it good for the economy. Well, in the short answer would be yes, there's going to be significant economic activity around the actual rearmament process itself. There's also more and more pressure to take unused or or what are you gonna call it in the neglected capital retained earnings that sits in Japanese banks and make
them more productive, make it more productive capital. And all of that will be partially sponsored or prompted by natural security concern and those aren't going away for the next ten to fifteen years. So overall, yes, it's kind of good for the economy. Some big spanding coming. We've got a very week end and we've got CPI UM expected to come in just a shade on the four percent when we get the next reading in three days time. So are we seeing inflation in Japan? And how sustained
is it going to be? We we've definitely seen inflation Japan. It's it's undeniable um. Now sector by sector, you you can make an argument something that will received again. You know, oil prices, who knows where they go, Kathleen, sorry, kathylene, nominal prices, who knows where they go? But the impact on food, you know, the man on the street when he goes and buys cardener, milk or a cup of coffee. It's real, it's it's it's it's much of it's been
done already. Um, how much can they use this inflation? How much can the government use this obvious inflation as a tool to force more capital into the system, more money in the system through increased wages for workers for example. That's what you want to watch, the inflation itself is we want to watch the by products of the quote unquote inflation response and that that will be very telling as far as impact on the economy. In just fifteen seconds.
Do you feel more confident now about next year than you did, say, two months ago. Absolutely. I think this is gonna be a This is a great time to be looking at Japan. I think of it as a zero some game. If Chinese going down, Stan's going up for investments going up. Good tease for our next our next interview with you, Ed, Thanks very much, We'll bring you back soon. Ed Rochers, CEO c i O at Rogers Investment Advices,