Sometimes the briefest bits of information are the most critical.
The Bank of Japan today put out its usual one-page summary for the April meeting of its Policy Board.
The summary begins normally, noting that Japan is faced with overcoming deflation and returning to price stability. This has become fairly common language from the Bank.
And, as expected, the Policy Board will continue to hold interest rates at an ultra-low 0.1%.
But something unusual comes at the end of the BOJ's note. Just a few sentences (emphasis mine):
"It was also confirmed that it would be necessary to strengthen the foundations for economic growth given the current economic conditions in Japan. Based on this recognition, members shared the view that it was necessary for the Bank to make new efforts to contribute to strengthening the foundations for economic growth.
In light of these discussions, the Chairman has instructed the staff to examine and report on another occasion, on possible ways to support private financial institutions in terms of fund provisioning with a view to strengthening the foundations for economic growth."
Translating the Bank's verbosity: Japanese commercial banks are hurting. The government needs to step in with more bailouts.
Troubled banks are something we've largely stopped hearing about over the last several months. Interesting that the problem is rearing back up in one of the world's largest economies.
By. Dave Forest of Notela Resources