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.