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Japan’s Central Bank Loosens Its Grip on Easy Money Policy

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Japan’s Central Bank Loosens Its Grip on Easy Money Policy

No country in the world holds as much debt as Japan, which has well over $1 trillion in U.S. government treasuries alone. Even the slightest shift to Japan’s low interest rates reverberates well beyond its borders, with the potential to drive up rates globally.

So, when the Bank of Japan on Friday slightly loosened its grip on a benchmark government bond, it was big news for world markets.

The move was the latest signal that the country may revise its longstanding commitment to cheap money, meant to spur Japan’s laggard economic growth, as rising interest rates abroad have driven up inflation and weakened the yen.

In an announcement following a two-day policy meeting, the bank said it would take a more flexible approach to controlling yields on 10-year government bonds, effectively allowing them to slip above the current ceiling of 0.5 percent.

The move was intended to “enhance the sustainability of monetary easing” by “nimbly responding to both upside and downside risks to Japan’s economic activity and prices,” it said.

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The change comes after months of speculation that the bank could move to tighten lending.

The bank’s ultra easy monetary policy is aimed at attaining demand-driven, sustainable inflation of 2 percent, a level policymakers believe would lift both corporate profits and wages in a virtuous cycle.

Inflation in Japan, the world’s third largest economy, has exceeded that target for over a year, hitting 3.3 percent in June. But the bank’s governor, Kazuo Ueda has questioned whether the price increases — which have been largely attributed to supply-side issues — are sustainable, leading most analysts to expect that a policy tweak would not happen until later this year.

In a statement, the bank said that it anticipated inflation would reach around 3 percent in fiscal year 2023, an increase from its previous forecast of 1.8. It cited “cost increases led by the past rise in import prices” as the main factor in the change.

Controlling bond yields has been a central element of Japan’s monetary easing policies.

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The 10-year bond plays a key role in setting Japanese lending rates, which policymakers have sought to keep at rock bottom as part of their efforts to stimulate economic growth by making money cheaper for borrowers.

The effort has come at a high cost: to keep yields down, the bank has had to spend enormous sums on purchasing its own bonds.

The Bank of Japan has come under increasing pressure over the last year as other central banks, led by the Federal Reserve, began raising rates in an effort to battle inflation stemming from the pandemic and Russia’s invasion of Ukraine.

Inflation in Japan never reached the levels seen in the United States and Europe. But rising interest rates abroad substantially weakened the yen, as money flowed out of the country in search of higher returns. That worsened inflation in Japan, which is highly dependent on exports for food and energy.

Nonetheless, the bank stood firm, resisting both domestic calls to intervene and assaults by speculators hoping to make a fortune betting against Japan’s ability to defend its yield target.

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Friday’s move is likely to put more pressure on the bank as markets seek to test its commitment to the new trading band, potentially leading to further loosening or even a complete abandonment of the policy.

But unwinding Japan’s monetary easing measures will not be quick or easy. Years of low rates mean that even small interest rate increases could be costly for households and businesses, which have come to rely on easy access to low-cost loans.

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Spirit Airlines bans see-through clothing and 'lewd' body art

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Spirit Airlines bans see-through clothing and 'lewd' body art

Spirit Airlines customers could be removed from flights for dressing “inadequately” or having offensive tattoos, the airline announced this week in an update to its code of conduct.

The low-cost U.S. carrier explicitly banned see-through clothing, bare feet and exposed private parts, as well as clothing or body art that is “lewd, obscene, or offensive in nature.” The rules are included in an agreement called a Contract of Carriage that all customers must abide by in order to fly.

Would-be travelers can also be removed from a Spirit flight for acting disorderly or violent, appearing to be intoxicated or refusing to use a seat belt. The Contract of Carriage was updated Jan. 22.

Last October, a Spirit customer took to social media to complain that she and three others, including a toddler, were removed from their flight because two women in the group were wearing crop tops.

The customer, who was flying out of Los Angeles International Airport, said on Instagram that she and her friend were harassed by a male flight attendant and told to cover up, the Independent reported. The post is no longer publicly available.

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In a similar incident, a Delta Airlines customer said she was targeted and removed from her flight last March for not wearing a bra. Delta’s Contract of Carriage prohibits bare feet and says a customer can be refused service if “the passenger’s conduct, attire, hygiene or odor creates an unreasonable risk of offense or annoyance to other passengers.”

Delta also issued a directive last year that flight attendants adhere to a strict dress code, including wearing undergarments.

In its contract with customers, Spirit said they can also refuse service to any passenger with a contagious disease or “an offensive body odor unless caused by a qualified disability.”

If a customer is denied service for violating the rules outlined, they will not receive a refund, the contract said.

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UnitedHealthcare Announces New C.E.O.

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UnitedHealthcare Announces New C.E.O.

UnitedHealthcare named a longtime employee, Tim Noel, on Thursday as its new chief executive, replacing Brian Thompson, who was killed last month in a shooting in Manhattan.

Mr. Noel was the head of Medicare and retirement at UnitedHealthcare, the insurance unit of UnitedHealth Group, where he has worked since 2007, the company said in a statement.

The former chief executive, Brian Thompson, was shot and killed outside a Hilton hotel in Midtown Manhattan on Dec. 4. A 26-year-old man, Luigi Mangione, was arrested in Altoona, Pa., five days later and charged with Mr. Thompson’s murder. Neither Mr. Mangione nor his parents were UnitedHealthcare customers, but he was carrying a brief statement when he was arrested that seemed to take responsibility for the shooting and that criticized what it called the health care industry’s “corruption” and “power games.”

Mr. Mangione faces three murder charges in Manhattan, including first-degree murder, as well as charges in Pennsylvania and federal charges. He is expected to appear in court again in February.

UnitedHealthcare, based in Minnesota, is one of the nation’s largest health insurers, covering more than 50 million people. UnitedHealth Group had revenues of about $400 billion and net earnings of more than $15 billion in 2024.

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The company said of Mr. Noel, “He brings unparalleled experience to this role with a proven track record and strong commitment to improving how health care works for consumers, physicians, employers, governments and our other partners.”

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Estimated cost of fire damage balloons to more than $250 billion

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Estimated cost of fire damage balloons to more than 0 billion

As raging wildfires continue to torment Southern California, estimates of the total economic loss have ballooned to more than $250 billion, making it one of the most costly natural disasters in U.S. history.

Early estimates by AccuWeather and JP Morgan put the damage in the $50-billion range, but the expected toll quickly rose to more than triple that amount as fires spread through neighborhoods in Altadena, Pacific Palisades and Malibu.

In the last two days, hundreds of weary firefighters have battled multiple fires in the hills around Los Angeles and Ventura counties, including a massive blaze near Castaic, an early morning fire in the Sepulveda Pass that threatened the tony communities of Brentwood and Bel-Air, and another that pushed into Ventura County farmland Thursday morning.

The latest estimate from weather forecasting service AccuWeather puts the total expected damage and economic loss to between $250 billion and $275 billion. That includes the costs of damage, loss of life, healthcare, business disruptions and other economic impacts.

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“These fast-moving, wind-driven infernos have created one of the costliest wildfire disasters in modern U.S. history,” AccuWeather Chief Meteorologist Jonathan Porter said in a statement. “Hurricane-force winds sent flames ripping through neighborhoods filled with multi-million-dollar homes. The devastation left behind is heartbreaking, and the economic toll is staggering.”

Multiple fires have already scorched thousands of acres in and around Los Angeles, displacing more than 150,000 people who have had to evacuate or lost their homes, and damaging or destroying more than 15,000 structures. The number of confirmed dead is 28.

The Palisades fire burning in an area from Santa Monica to Malibu has swept through some of the most expensive real estate in the country, with median home values over $2 million. It may become the worst wildfire in modern California history based on the number of structures burned and economic loss, Porter said.

Estimated financial costs surpass the damage and economic loss numbers for the entire 2020 wildfire season, which was a very active U.S. wildfire season, Porter said.

According to the National Oceanic and Atmospheric Administration, Hurricane Katrina in 2005 has been the most expensive U.S. natural disaster to date, costing an estimated $200 billion.

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