BoJ board member Noguchi says essential for BoJ to maintain ultra-loose monetary policy and seek balance in labour supply and demand
Says:
- Japan is seeing wage hikes unseen in the past via spring wage negotiations.
- Essential to continue to maintain appropriate balance between labour supply and demand through the continuation of its accommodative monetary policy to achieve the 2% price target.
- Japan must achieve positive wage-inflation cycle as soon as possible and for this, service prices must keep rising.
- Last year's spring labour-management negotiations have triggered an unprecedented wave of wage increases.
- Another factor that is key is for small manufacturers to be able to smoothly pass on rising wage costs to prices.
- If wage hike translates into higher prices, that will show through rise in service prices and this trend is clearly appearing.
- Under the new policy framework, the pace of adjustment in the short-term policy rate will be made at a pace that is incomparable to that of other major central banks.
- It will take a significant amount of time until trend inflation continues to rise around 2%.
- Focus now is on the pace at which the policy rate will be adjusted and at what level it will eventually stabilise.
- Long-term neutral interest rate is highly likely to be lower than that of other countries.
- At some point in future, it's desirable to start shrinking BoJ's balance sheet.
- Steps BoJ decided in March is a move toward this direction of future shrinking of BOJ's balance sheet.
- He dissented to BoJ's March decision since he thought it would be appropriate to maintain JGB buying under negative rate.
- Rise in services prices not driven mainly by wage hikes yet.
- Japan's economy in moderate recovery trend but growth stalling recently.
18 Apr 2024 - 02:33- Fixed IncomeData- Source: Newswires
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