Bank of Japan (BoJ) board member Asahi Noguchi said on Thursday that the “focus now is on the pace at which the policy rate will be adjusted and at what level it will eventually stabilize.”
Additional quotes
Essential for BoJ to maintain ultra-loose monetary policy, seek balance in labour supply and demand.
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.
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.
I dissented to BoJ’s March decision since I thought it would be appropriate to maintain JGB buying under negative rate.
Rise in service prices not driven mainly by wage hikes yet.
Japan's economy in moderate recovery trend but growth stalling recently.
Market reaction
USD/JPY keeps lows near 154.20 following these mixed comments, losing 0.09% on a daily basis.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds.
The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.
A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. Still, the Bank judges that the sustainable and stable achievement of the 2% target has not yet come in sight, so any sudden change in the current policy looks unlikely.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady above 1.0650, awaits US data and Fed verdict
EUR/USD is trading sideways above 1.0650 amid a softer risk tone and broad US Dollar strength on Wednesday. With European markets closed for Labor Day, the pair awaits the US employment data and the Fed policy announcements for the next directional move.
GBP/USD flatlines below 1.2500 ahead of US data, Fed
GBP/USD is off the lows but stays flatlined below 1.2500 early Wednesday. The US Dollar strength caps the pair's upside amid a cautious mood ahead of the top-tier US employment data and the all-important Fed policy announcements.
Gold consolidates losses below $2,300 with eyes on Fed policy decision
Gold price hovers below $2,300 as uncertainty ahead of the Fed’s policy announcements improves the appeal of the US Dollar and bond yields. The Fed is expected to support keeping interest rates at their current levels for a longer period.
A new stage of Bitcoin's decline
Bitcoin's closing price on Tuesday became the lowest since late February, confirming the downward trend and falling under March and April support and the psychologically important round level.
ADP Employment Change Preview: US private sector expected to add 179K new jobs in April
The ADP report is expected to show the US private sector added 179K jobs in April. A tight labour market and sticky inflation support the Fed’s tight stance. The US Dollar seems to have entered a consolidative phase.