{"text":[[{"start":7.94,"text":"On Tuesday evening in Tokyo, with Donald Trump’s threat to eradicate “a whole civilisation” hanging in the air, a litre of petrol in some parts of the capital cost ¥157 ($1): lower than it was before the first bomb fell on Iran in February."}],[{"start":27.43,"text":"That weirdness is helpful. The situation is becoming exactly abnormal enough for the Bank of Japan to normalise interest rates at long last. "}],[{"start":38.56,"text":"At the end of April and barring a very significant escalation in the Middle East, there is a good chance that the BoJ will move its policy interest rate a quarter point higher to 1 per cent. Sniff the bouquet and roll it around the palate: this is the vintage the monetary one-o-philes have been waiting for. "}],[{"start":58.540000000000006,"text":"The significance of a shift to 1 per cent would not simply be the bravery of such a move by bank governor Kazuo Ueda, or the 30-year odyssey of oddity that led here, but the unmissable intent of the integer. "}],[{"start":73.93,"text":"Hitting the 1.0 threshold is the psychological opposite of a shop “charm pricing” an item at 99p to trick the consumer’s brain. One per cent, after so many years of Japan’s hand-to-mouth monetary policy, feels like a plate ready for more to be heaped upon it. Real rates, even after the potential rate increase, will still be negative and the BoJ may be undermined by domestic and external events. Large constituencies of Japan have been conditioned to think of interest rate normalisation as straightforwardly terrifying. "}],[{"start":111.91,"text":"But at this unusual juncture, with Japan’s dependency on the outside world looking more than usually unwise, the lure of normal is now far, far too strong to pass up. Its closest allies (the Americans) are unreliable, its biggest trading partners (the Chinese) are furious and its most precious resources (the Japanese) are in dwindling demographic supply. "}],[{"start":138.4,"text":"There are three clear reasons why Ueda may choose the April 28 policy meeting to make the historic move. "}],[{"start":148.04000000000002,"text":"First, on a number of measures Japan’s economy is running fairly hot. Union-secured wage hikes were above 5 per cent for the third straight year. Twice in the BoJ’s March meeting, committee members cited the risk of the central bank falling behind the curve. The BoJ’s most recent quarterly Tankan survey of corporate sentiment before and a few days into the war found the overall diffusion index (net “good” and “bad” views of business conditions by manufacturers and non-manufacturers) at plus-18 for the second straight quarter. The last time it was up here was 1991, in the final days of the asset price bubble. Companies may have reason to be optimistic. "}],[{"start":186.44000000000003,"text":"The second argument for an April rate increase is that the yen is close to the ¥160/$ level where the government has, within the past couple of years, felt obliged to intervene to provide artificial support. The authorities have, in the turmoil of the past few weeks, hinted strongly that they could step in at any time. Those threats have helped a bit; the greater support arises from the market’s expectation that the BoJ is close to raising rates. If war is raging at the end of the month, Ueda may get away with postponing the move: if things are relatively calm and he hesitates, the yen will become an instant index of disappointment."}],[{"start":230.12000000000003,"text":"The third factor relates to those petrol prices — notably calm for a country so dependent on imported energy and with a weak yen now exposed to surging prices. Part of this arises from Japan’s preparation for a crisis: the eight months’ worth of oil inventories it carries. But the greater work is being done by government subsidies — a taxpayer-funded assertion that Japan’s vulnerability to external shock is too great for households to contemplate."}],[{"start":261.52000000000004,"text":"Based on yen prices for Brent crude, calculates CLSA Japan strategist Nicholas Smith, the government provided subsidies of ¥49.8/litre in the week ending April 2 to keep the national average price down to ¥170 — an arbitrary level chosen by the prime minister in early March."}],[{"start":285.32000000000005,"text":"Critically, the BoJ has seen all this coming. The central bank last month began reporting a new series that not only strips out fresh food and energy from inflation but additionally discounts any kind of government intervention in price-setting. "}],[{"start":301.02000000000004,"text":"In its quest to finally normalise Japan’s monetary policy and take rates to 1 per cent and beyond, the BoJ has suddenly become much more realistic about where a lot of the abnormality was coming from: a government and a country addicted to a subsidy-tinted view of reality. It is no coincidence that the BoJ has had to wait until now to get to 1 per cent: the world is getting too weird for the subsidy sedatives to work."}],[{"start":338.0900000000001,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1775727131_5701.mp3"}