>> good morning and welcome to daybreak europe. let's get to the stories that set your agenda. chinese policymakers mobilizing 270 $8 billion to stabilize the market in the latest round of stimulus measures. the boj keeping its key policy rate and yield curve control policy unchanged in a unanimous decision. the 2024 inflation forecast cut to 2.4%. in the middle east, the united states and the u.k. launched new airstrikes against a targets. the latest sign of escalating tensions in the region. there's a lot going on around the world that are going to feed into what you see in the european session. i want to start with a cross asset picture.

anna terry policy will be front and center as we watch what happens with the boj. what kind of guidance we are given has repercussions for the global bond market. 10-year yield is where we are seeing it down by two basis points. it's a really interesting dynamic as recently talk about the moves we see across the currency picture. dollar weakness seems to be the story. euro-dollar at 109. cable at 127. the theme of european strength when it comes to currencies is still there. brent crude higher, given the latest tensions in the middle east. dollar weakness helping that story as well. the equity market as well. we talk a lot about the monetary policy. the readthrough to the equity market is people are doubling down to the green on the screen. euro stoxx 50 futures are headed in a positive direction, same with the ftse 100. you are not seeing the selling prescient -- selling pressure. marginal gains for the s&p 500. the direction a's positive.

bullish sentiment is alive and well. which brings us to more of a micro-take on the equity story. earnings numbers coming out of erickson. fourth-quarter adjusted growth margin coming in at 41.1%. the estimate was 39.2%. there are current market uncertainties prevailing into 2024. they are saying the further fall of the market outside of china in 2024, they are warning about these macro uncertainties, even though there margin is looking good at the moment, it may not look good forever. their fourth-quarter sales numbers are coming in stronger. i think it's important to talk about with the ceo was saying. this is swedish telecom company that has won a contract coming out of a c&c. that was the saving glory. the ceo is confident the market recovery should materialize and investment levels are unsustainably low for operators. it's a really interesting

dynamic we will discuss with erickson ceo. that coming up at 7:15 u.k. time. on the surface, the numbers are strong. does that set it up for a positive european open when the stock market shares start trading. be sure to tune in at 7:15 a.m. london time. 3:15 if you join us from hong kong. that brings us to how the asian markets are faring. avril hong standing by with that story. apple: -- aperal: -- avril: asia stocks are higher. that's not just because of the stimulus from the markets. that rescue package. it is also the positive hanover we got early on in the session. it is very interesting how we see that late session on the csi 300 rising for 10th of a percent. this is above the five-year lows we saw. it was moving in between the red and the green today.

the hang seng has been climbing even though it is pairing the gains from early on with the session of 3.4%. you get the sense that in the asian markets, you are going to have to see this rescue package from china coming in. the delivery has to be one of shock and all. i quickly, what we see in the rally will be fizzling out. let's flip the board and take a look at what we see in japan. of course we've got the boj, the message was one of dovishness. the bond space is moving along with that. interesting we see the benchmark and the broad pay gauge flat. from early on in the session it could be profit taking. it could be investors turning more cautious. let's flip the board again. i want to try to tie this all together for you. it's very interesting how we are seeing, against the backdrop of this rescue package, that means the money will come from offshore.

bc this move in the offshore currency has moved below 717. the big gainer, the onshore yen following along. ozzie having a really good day. our mliv strategist mark cranfield has pointed out that the dollar bears are out today. that might actually be helping to cap the losses on the yen despite the dovish -- dovish message from the boj. kriti: one that has global repercussions is the boj going against the current that you are seeing in the rest of the world. avril hong in singapore, thank you. i want to go from japan to china , where bloomberg learned they are considering a rescue package of nearly 280 billion dollars to stabilize its stock market. policymakers seeking to mobilize funds from the offshore accounts of chinese state owned enterprises all to buy shares onshore through the hong kong exchange. jill disis joins me. bloomberg's china economy and

government editor. a favorite of this program. let's talk a little bit about what this actually means. this is not a method of intervention. you see any other developed market or any other part of the world that is this large. explain to us how this works. jill: we are still trying to get details about what exactly this entire package would entail, but this does recall some of those period stabilization fund efforts from 2015 during the last massive china stock market rout where you see this ability of essentially making available funds for these soe to then use it with a mic -- where the markets try to shore up some confidence. in this particular case, we are talking about 278 billion dollars, so 3 trillion u.n. worth the money, -- yuan worth of money, mainly from offshore accounts. they buy shares onshore through

the hong kong exchange. this idea by utilizing the offshore funds would essentially head off any further volatility with the currency. we have seen the yuan slip since the stock market rout has intensified on the back of some of the economic data, the deflationary data we've been seeing out of china. i think that at this point we still don't know how immediate this funding would ultimately be. are we talking about these soe's buying piecemeal or are we talking about something in one paygo? as avril said, we have to think they want to utilize something that feels more shock and and feels more holistic on the part of china's government in terms of how they would interact with these funds just because, as you've mentioned, these piecemeal efforts, especially over the last several months, have not move the needle too much. just the stock market reaction

we have seen, we got that big bump in the hang seng this morning. we saw a boost in chinese stocks coming back, but how sustainable is that going to be, we will have to see. kriti: it's a really interesting dynamic that is driving the market. i guess the question is, how much stimulus is too much stimulus? it's a question we have been asking for several years. jill disis joining us from hong kong. thank you for that crucial content. i want to circle back to the japanese story. we were talking about what they were doing. let's talk about global repercussions out of the boj. they have kept the policy unchanged, offering no clear hints on when it will end negative rates. they ended at -0.1 percent keeping yield curve controls intact. our bloomberg economics team joins us this morning. a pleasure to have you on the program, as always. talk about your initial take from the boj's decision today.

was it really that much of a surprise? >> it's not a huge surprise, it's just a dovish hold of its excessive stimulus using yield curve control and negative interest rate policy. the market expected there should have been no change. if there some surprise. there is a tweet in the outlook report, meaning that they added a sentence that the likelihood of underlying inflation is edging up towards its 2% target is increasing. the governor mentioned it in the previous meetings, but it's the first time to mention it in the outlook report. in its assessment -- the risk assessment of its price forecast, they are used to saying it's october report. in the long run, the fiscal 2020 five outlook is skewed to the

downside, but they revised it to be on balance. that means the boj see some progress in its price development. at the same time, those messages are repetition of what they have talked about in the previous meeting. the focus is now on the governor's press conference on how he will punctuate on these changes. kriti: i'm curious about the currency picture. if you look at the analyst calls, you are seeing dollar yen hover around 150 or hit that level. we are looking at 14809 on dollar-yen, but talk to us about the possibility of currency intervention. bloomberg economics, led by yourself, have forecasted that any change in the boj likely won't come before july. that still leaves six months will you will see that currency move and further currency weakness. could we see signs of

intervention from the japanese policymakers? is that something we should pay attention to? >> there is pressure to the yen. particularly the boj is on hold. the rate cut expectation for the fed is also jittery recently. that's by yen dropped again to the level that fx is carrying. i think the important threshold is 115 against the yen dollar. so that is an obvious threshold. last year the fx was caring about it. if the yen reaches to that kind of level, we have to be careful about their communication. they will start. at the same time, if the governor signals something about its policy of it as the market

expects in the consensus for april, that will be neutral to the yen. but, as i expected, if it signals for longer, my expectation is for july because it will take more time for the boj and their wages and prices are making a good progress in the macro data. so it if he singles in that way, that will be temporary selling pressure so the investor should be careful about how investors will jump on the effects intervention. kriti: another one that has multiple ramifications as we look at the yen as its credit currency. what does that mean for the boj that is going in the opposite direction of their central peers. we thank you so much for your analysis this morning. press comes in just shy of 18 minutes. we have seen some deal flow

coming in buying it of a total bout -- value of 2.2 billion dollars. they are buying all outstanding shares, listed on the nasdaq, it is an american company headquartered in california. talk about the deal and $30 a share in cash going talk about those shares as well. just for context, santa fee is not alone in terms of all of these companies looking to diversify their portfolio. this is a company that is working on clinical trials that targets a disease that talks about developing pulmonary disease. so it looks like a gained exposure to the hard diagnostics part of the business. it's really taking a chance on experimental technology after those clinical trials are still in play. so it will buy them for a total value of $2.2 billion. as we get more details of that deal we will bring them to you. i want to stick with the united states because as we are talking about what will move this

market, we are in the middle of election season. the 2024 presidential race this week has been one of twists and turns. now we are looking ahead to the new hampshire primary that comes up tonight in the u.s. session. this is why it's important for our global audience. we were talking about the state run primary as opposed to a party run primary. this is important for new hampshire. for a global audience this is a small state in the united states and only makes up 1% of total delegates into the electoral college. here's why it's important. 39 percent of voters in new hampshire are undecided, they are independent. a new hampshire law allows independents to vote in republican and democratic primaries. if you are asking the question whether or not nikki haley could swing these independence, not just to the gop, but specifically to her side, that is what matters. historically, this is a state that has seen exceptional turnout. wreck out -- record turnout is

what's expected. 322 thousand expected for the gop. that will beat the gop republican turnout 283,000 both in 2016. it speaks to this idea that you are seeing massive participation in new hampshire. historically it has been a peak in about who gets the gop nomination. i will wrap it up in one quick sentence. to put of new hampshire, iowa picks corn but new hampshire picks presidents. that speaks to the track record if i we care about this primary. we will bring you the details in the hours ahead as long -- as well as geopolitical coverage. stick with us. this is bloomberg. ♪

kriti: the u.s. and u.k. launch new airstrikes against a targets in iran. the group has been attacking

commercial ships in the red sea since october. i'm joined by bloomberg's news director. this is the eighth around of allied attacks in the last two weeks. what can you tell us about this latest strike offensive, why now and where are they targeting? >> the u.s. said this was the most significant attack that they had done on houthi targets inside yemen. this was the first attack which was about january 11. they said this was a significant move to target underground missile culpability to target surveillance capability and really saying this is part of their ongoing effort to degrade the ability of the houthi's to continue to make their attacks on the shipping in the red sea. they did say they are making progress on that front. the question is, how much and how quickly. because the u.s. president, joe

biden, said it's very difficult to know they are able to reduce the ability to make these attacks. of course they have been doing these attacks not just since october, but for many years they have been taking pot shots at shipping in the red sea and land targets in the region. they are good at making attacks and essentially disappearing. a lot of their equipment is very mobile. so understanding just how much they are able to degrade that capability is very difficult to know. we do know that the who these -- that the houthi's have been continuing attacks on the red sea and probably achieving their goal. they are able to disrupt shipping and are growing in popularity in yemen. they are getting new supporters. it's very unlikely the u.s. would end up with intruders on the ground. there is no reason to stop their attacks. certainly, there's no sense so far for what happened in the overnight strikes, that they've been able to really prevent them

from continuing to make further attacks. kriti: a scary dynamic, if you look at the press release, they actively talk and name the allies that do have their back. canada, australia, bahrain, the netherlands. those -- there are notable countries that are missing from that support. thank you for bringing that context. let's go to those countries that aren't as excited about what the u.s. and the u.k. are doing. israel coming under mounting pressure from the european union. the eu's foreign policy chief saying israel will not defeat hamas by inflicting hardship on the people of gaza. i'm joined by our european correspondent. pleasure to have you on the program. the eu also pushing netanyahu to discuss a two state solution. what do we know? maria: every european minister that walked the red carpet yesterday in brussels said it very clearly. the way out of this conflict will have to be a two state

solution over the long-term. what that looks like it is unknown. it's an imperative question for all of them. if you look at the top european diplomats who said, i do not want to talk about peace, that is a very abstract conflict. we need to talk specifically about a two state solution. on top of that, the european union also saying they want to organize and call a peace summit as soon as possible that would involve neighbors and the european union to find a diplomatic breakthrough out of this as the fighting continues. having said that, when i spoke to my sources yesterday, they said this is unrealistic for two reasons. one because the european union is not very relevant geopolitical agent in the region. it is the united states that sets the scene. if there was to be a peace forum , a peace debate, the u.s. would

have to actively participate. it's not just the eu. secondly, because this meeting was described to me -- you had the israeli foreign minister give a presentation, you also have the egyptians, georgians, saudi's talk in the summit of foreign ministers with the eu, but this was described as a dialogue of the death, insisting israel is a country very much focused on its military operation and is not ready to drop it for a peace summit. kriti: bloomberg's maria tadeo following that story closely. the european angle on what is choosing to be a hot button topic. we thank you for your analysis. 20 more ahead. stick with us. this is bloomberg. ♪

kriti: welcome back to daybreak

europe, senegal is preparing for european elections and will exclude the candidate who poses the biggest threat. let's go to the rwandan capital. she joins us this morning. walk us through the options after this exclusion. >> there are several options that some can explore. one is to throw support behind an opposition candidate who is the president's hat picked successor. they are currently working as the prime minister but has vast government experience. he has worked as minister of finance, minister of foreign affairs. it's important to remember that he enjoys massive political support amongst the youth. they view him as a speaker of truth to power and believe that the charges against him are politically motivated. something the government has denied. whoever he chooses to throw his support behind will in a fit from his political prominence.

he could choose to call for protest. this would not be the first time his legal challenges of unrest are in the country. last year in june deadly protest left 16 people dead. kriti: it is a scary situation and one that has repercussions for the continent of africa. we thank you so much for the context this morning. there's a lot going on when we talk about the global dynamics. we talk about elections, geopolitics. we are talking about monetary policy. that's what will be crucial. in just a couple minutes time we will talk about the boj. if i could talk a little bit about the currency pressure we see in the japanese yen, dollar yen at 148. when you talk about what the analysts are calling for, the underestimated scary level is 150. that is a line in the sand. what's important is the estimate, as you see wage spiral conversations happening in the

spring. a lot of the economists that you are actually seeing watch the boj and say that will be the moment you see the boj hike. wage negotiations will help balance out the economy when he talked about inflationary pressures. if more and more people earn more and more money in japan, they can take on inflation themselves and real wages will catch up to and -- to the inflationary dynamic and bring the boj back into balance, perhaps bringing it back in step with its global peers. the problem is, this is what the bloomberg economist team points out, even if negotiations happen in the spring, real action may not come until july. what does that due to the currency pressure you continue to see? that will be a conversation we explore next. full coverage of the governor's press conference shortly. we will have full analysis, plenty of charts and hi, i'm jason and i've lost 202 pounds on golo. so the first time i ever seen a golo advertisement,

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kriti: good morning and welcome to daybreak europe. let's get to the top stories that say your agenda. chinese policymakers seeking to mobilize 270 $8 billion to stabilize its slumping stock market in the latest round of stimulus measures. the bank of japan keeps its key policy rate and yield curve controls unchanged. the inflation forecast cut to 2.4 percent. we will bring you the press conference live with full analysis. in the middle east, the united states and u.k. launched new airstrikes against a houthi targets in the latest sign of escalating tensions in the region. there's a lot to digest in the last 24 hours. i want to go through what the markets are doing. we are seeing green on the screen when we talk about

futures. euro stoxx 50 futures higher by a 10th of a percent. you are starting to see outperformance in the u.k. all the green on the screen in the last two trading sessions you have not seen a pullback. futures trading in the actual european trading session. 4881 when you look at those futures. a real element of momentum, of risk appetite. at least when it comes to the stock market. let's talk a little bit about monetary policy as we look around for a period wait for what the governor has to say. there will be repercussions around the world. i will start with the treasury market. for all nine, down by one basis point at the moment. here's what sticky. the fact that 4% seems to be the line in the sand. even though we see downward pressure in yield, a creates a tailwind in european currencies. 109 on euro-dollar, 127 on the

cable rate. this is the theme we have been talking about. if you continue to see dollar weakness really anticipated on rate cuts by the federal reserve, what happens if the ecb cuts first? is that dislocation the market has to catch up to or that the market is ready or position for? that will be a big thing we watch. brent crude trading at 80 handle. you continue to watch brent crude in terms of the margin of movement, higher by 2/10 of 1%. it is only a move. i would encourage our global audience to pay attention to the round number as we talk about simply whether or not these geopolitical tensions have a real readthrough into those commodity markets as of now. a lot of people maybe don't want exposure through the commodity target. i'm talking about macro traders who hopped into the oil market to say this is the inflation hedge. that's go around the hedge. i want to bring asia boards up and talk about the market reaction you are seeing

specifically in china. the chinese equity market is ripping and roaring this morning. a lot has to do without policy coming at 287 billion dollars of potential stimulus. you are seeing strength in the chinese offshore yuan. in the meantime, this comes as we wait for the governor to start speaking. remember, we did hear from the bank of japan at the moment talking about really not changing the rates, really not talking about yield curve control. it looks like the governor is beginning to speak at their press conference. we will bring you those headlines live. the very first thing he says is japan's economy is recovering moderately and japan's economy is gradually recovering. he expects that to continue. those are the initial headlines we are seeing. is that much surprise from the boj? i want an immediate reaction as we continue to see those comments rollout. paul dobson from our markets team joins me this morning. let's start off with you and

talk about whether or not this is fair to say, is the japanese economy recovering? paul: i think it is the name of the game and it comes to the way the boj is approaching everything. yes, the economy looks in good health. they did tweaks to their gdp forecast for the next couple of years. also to the inflation forecast in the statement that we had beforehand. the thing i think the markets have latched onto is this insertion into the statement that there boj is gradually moving towards its inflation goals. it has everybody perking up their ears thinking about that april timing for movers becoming just that little bit more certain after the latest commentary from the central bank. kriti: talk to us quickly about this currency picture. as we talk about where analysts are looking at where dollar-yen could go, it is still 150 that the line in the sand. 150 and 152 has created a little

bit of panic. why aren't we seeing that number higher? paul: the yen is the worst performing major currency in the world this year. it has weakened something like 7%. at the start of the year became very clear that the boj was rushing to get interest rates at negative levels. indeed, the earthquake that we solve right at the start of the year over the new year would be sufficient for them to push back and wait a little bit longer to ensure that that hasn't had any undue turbulence in the market. also, they are very keen to wait and see whether the wage negotiations are successful in japan and inserting that inflationary mindset within the population. what we saw as a result was people pushing back their bets

for how fast the boj will move at how aggressive it will be this year period on the other site, there was plenty of confidence in the fed being ready to move quickly. that pushed the yen weaker. 150 is the next stop off level in terms of big round numbers. the market is just a little bit thanks d if we were to get to those levels, the rhetoric might start to pick up around discomfort, especially the pace of the weakness of the yen. it hints towards some further invention if the yen were to continue to weaken so that it's above 150 against the dollar. kriti: as we speak, i want to bring you the latest headlines coming out of the governor. he said the uncertainty for boj's outlook is rising casually. talking about that keyword gradual, slow and steady progress. there are high in certainties for the price outlook. they are going to add easing, if needed.

that will be one of the criticisms of the boj. does the boj need additional easy when their purist don't? it looks like he says that's on the table. after that into context saying he's an academic. this has been a miscommunication that keeps his options open. saying it could be needed does it mean it will be needed. a final question to you. as we talk about dollar-yen, is the market ready for a shakeup in april or july, whenever that shows up? paul: i think that it could still create some volatility. you were just talking about, at the moment there is a policy stance that is still accommodative if we remove those terms that would signal we are getting ready to be a little more aggressive and supportive. i think if you look at cross markets, it's not just the head weakness but the rallies held by that weaker currency and help by the boj stands.

there could be something of an unwind if we get there. but everything is so gradual as we have been talking about, probably the market has plenty of time to get everything pricing ahead of time if the boj continues to be the dictaphone and as clear as it can be in its communications as well. kriti: it's certainly something we will watch closely. thank you so much for the instant analysis as we start to see those immediate reactions coming out. specifically talking about labor unions, talking about asking for higher payout wage stocks. no surprise there. this is something the market was worried about. economists pointing to wage negotiations between a lot of corporate japan and some of its citizens. remember, 70% of the japanese population is employed by small to midsize companies. this has been the pressure from the fiscal size. if these wage negotiations need to happen so the average

japanese citizen can catch up to what you see with inflation, the real wages are positive or at least neutral, rather than in negative territory. what does it then mean for the currency picture? we talk about the positioning story with paul dobson. mommy talk about what the yen is going to do, we have to talk about whether or not it's in tandem with what you see with the two-year treasury. here's why this matters. this speaks to the positioning within dollar-yen there really is a function of a lot of people waiting in shorting this. you see the big divergence between dollar-yen and two-year treasury which really shows you on the chart just how much of a dislocation it is in the market as we start to see the boj forge their own path. i want to get a little bit more analysis as we bring in one of my favorite markets reporters, avril hong is standing by for me. you have covered this from the region, you are in singapore, you cover the story from

different angles. i'm curious about this dislocation. is this something that, if concerning, when the boj as a track record, a very experimental monetary policy, should we be concerned the boj is on a different path than the federal reserve, the ecb and other central banks around the world? avril: one of the key things that have been sticking out in this presser is, in the same presser where he says the certainty for reaching boj's outlook is rich in -- is increasing, he says the uncertainties are high for the price outlook. it's not just how there is a dislocation or a disconnect firmware markets or economists see the fed shredding, but it's a sense of miscommunication and not very clear messaging that we

are getting from the governor so far. we are also seeing how there is the increasing concern. we know they want to see a wage push coming through into the economy that needs to be the real nitty-gritty before we actually see a tweak in any shape or form. whether the yield curve control or the short-term negative rate policy. it has been keeping us guessing. the other element is also, as we see the yen that has been facing most of the gains from november, what is that going to mean for the lessening impact of the imported inflation. there's a lot to unpack here. kriti: stick with us, don't go anywhere because as you speak, we are seeing movement in dollar-yen. i want to get a quick check on it for our audience.

14776 is where we are. we are seeing strength in the japanese yen. this comes after the governor makes certain, saying he will assess the data carefully. he wants to see if the virtuous cycle is strengthening. basically, are we seeing the wage on the conversations on the right path? that keyword virtuous keeps coming up. he talks about the economy developing in line with expectations. i think the line that moves a lot of the markets is that he's willing to mall if the negative rate should be kept if the price goal is insight. that is the music to the markets years and whether or not this negative rate is actually reasonable. this is one of the very few times year the governor say maybe we need to reconsider our approach. perhaps laying the groundwork for something later. your initial take on those comments in this reaction. the strength you see in the japanese yen, do you thicket will hold?

>> just based on that line the market is reacting to, it is a surprise how the governor has been holding back in a way to the communication of the market of when we will see the list of when we will see the exit from the negative rate policy. this might be seen as less dovish, perhaps a more hawkish signal to the market. he's also not letting up on when we will actually see the boj moves. it is changing here. the market consensus is for something in april, but perhaps this very mention that might be something that is keeping the market on its toes today. kriti: it's something we will be

watching very closely. if you look at our follow our markets live blog, the bulls are getting a little bit excited about it. perhaps not that it's this one that is sustainable. we thank you for the instant analysis on the governor's comments. they are really talking about the inflationary dynamics. i want to put that into context as we await more and more comments from the governor. he's already saying they will be examining incoming data at every single meeting. at its core is is the inflationary story. i want to bring you a chart that talks about the price gains for the boj. this is not just a post-covid issue, this is a decades long issue when we talk about the boj. the inflationary dynamic has been the opposite. you have seen so much deflation in the boj that they welcomed inflation with welcome arms because they have a very different demographic. in asian population that creates less innovation, less growth at a similar pace than their peers.

the chart you are looking at complainant -- compares the boj's inflation date with the likes of the fed and the ecb. this is why it's acceptable for economists and strategists around the world that the boj can take their sweet time and diverge from the fed, from the ecb, from their other g10 peers. that brings me to another chart that brings back the focus to real wages. just how much can the japanese -- average japanese citizen of ford at a time when import cost for japan as a function of oil prices and subsidies, as a function of all the imports that japan has, mainly oil prices, will be impacting the consumer. this shows wages are falling behind inflation in a big way. compare that to what you saw in europe in the united states is a similar dynamic to what you saw in 2021. inflation far outpaced how much people can afford. that is where you see issues. those are the two charts i want to leave you with before we go on break.

we will have full coverage of the governor's continued comments and more analysis coming up. stick with us. this is bloomberg. ♪

kriti: this is daybreak europe. we are looking at live comments coming out of japan around the governor. we just had that boj decision, no change to rate, a animus decision, nine-zero talking about the fact we are not there yet on a great change or tweak the yield curve control. at the same time, you are getting lines coming out from the governor suggesting that they would perhaps consider what that negative rate might do and whether or not it's really necessary. they are cushioning those

comments with establishing every piece of incoming data even though they say the economy is developing in line with those expectations off the back of those comments, that little hint of what might change down the line. you are seeing dollar yen weakened, 147.40. the japanese yen strengthening. you see bullish sentiment, just getting excited around that, japanese jgb 10 years falling to 146.73. down 26 ticks on the governor's comments. i want more analysis. stephen engle joins us from tokyo to talk about what the governor is actually mentioning. pleasure to have you on the show. let's talk timing, if we can. if you look at strategists around the world, even the governor's comments, he goes on and says march, the spring, the wage conversations will be a game changer for the boj. that's where you will see that perspective change.

but, bloomberg economics is saying something very different. they say the reaction function from the boj won't be as instantaneous. it still might take a couple of months. your initial take on that divergence. stephen: the economists surveyed by bloomberg have circled the april meeting is the likely time, maybe 68% or 51% of economists surveyed expect april to be the sweet spot. by that time, it it will be complete. it is the annual wage negotiations between the unions and employers. i spoke to -- earlier today. he is the former assistant boj governor, and he told me that they are expecting the wage negotiations to be much better than last year when, essentially the unions got a 3.6% wage hike,

which was the highest in 30 years. he's expecting an even higher negotiation rate this year. so that would then go into effect, essentially, by the new fiscal year, april 1. but i understand why bloomberg economics is talking about july or thereabouts, simply because it does take time for those new wage hikes to feed into the real economy. keep in mind, the households in japan are at bit skittish. they have had deflation for more than 20 years, followed by now inflation of above 2% since april of 2022, and a weak yen, which has raised the cost of energy at the household and the like. so they are not spending as much. they are a bit skittish about this right now. it might take time to feed into the economy for lasting inflation. that's what the governor wants. he wants sustainable inflation

backed by wage gains. there was indication that perhaps they are see a mat with the fiscal 2025 cpi forecast. and that inched up incrementally. kriti: i want to bring more headlines as we talk about the press conference. he said they have yet to grasp the full scope of the earthquakes economic impact. he said there's a certain amount of information available before the march meeting, that's what they are watching in terms of number and data that they are monitoring. they say they will only decide policy appropriately. his last, really harps on what you said. import driven inflation has doubt. that is an interesting dynamic and an interesting, to make. you mentioned the oil prices. i think what's little-known for the global audience that aren't following oil as much is simply that japan is very dependent on

oil prices, so with geopolitical tensions in the middle east, i'm curious if you think japan should be more worried about the readthrough into their economy at a time when they thing import driven inflation has? in our last minute, your take. stephen: if that has peaked out, it's probably why the bank of japan did ratchet down its fiscal year 2024 inflation outlook from 2.8 down to 2.5. that's largely because of those energy prices having peaked that are coming off a little bit. keep in mind, it still forecasted above the bank of japan's 2% inflation target. so that's on top of what we have seen above 2% since april of 2022. kriti: stephen engle, we thank you so much for your analysis this morning. plenty more ahead coming out of the boj. stick with us. this is bloomberg. ♪

kriti: we have been moderating -- monitoring the comments coming out of the bank of japan. the governor making comments. he is basically saying they would consider whether negative rates will -- should remain if the price goal is insight. he is also mentioning the cost push inflation -- he is making a reference to oil. the readthrough from oil prices into the japanese economy is a crucial one. the governor is an academic. he considers all of his options. those comments creating strengthen the japanese yen. 147 17 is where we are. up next, markets today continues. coverage ahead. this is bloomberg. ♪