BoJ's Takata: Japan is close to achieving price target but hasn't fully achieved it yet
Bank of Japan (BoJ) Board Member Hajime Takata said on Thursday that Japan is close to achieving BoJ's price target but hasn't fully achieved it yet, so it needs to maintain an accommodative monetary policy.
Key quotes
"Can't say with pre-conception how long BoJ could wait before raising rates."
"Want to scrutinise developments, including US Inflation, Fed moves, from now through summer."
"Hard to pin-point japan's neutral level of interest, guide policy with specific neutral rate estimate in mind."
"Japan is close to achieving BoJ's price target but hasn't fully achieved it yet, so need to maintain accommodative monetary policy."
"Can't say now with any pre-set idea, when asked about chance of another rate hike by year-end."
“Will respond looking at market moves for each maturity zones, balance between supply and demand, when asked about boj's bond market operations, taper plans.”
“BoJ tankan showed no change to moderate uptrend in capex.”
Uncertainty surrounding US Tariffs remains, some firms may have yet to incorporate impact due to lack of clarity on trade outlook.”
“Domestic factors show Japan's economy making progress toward completely achieving BoJ's price target, but is under huge stress from external factors.”
“Hard to predict exactly when BoJ's price target will be completely achieved until US tariff impact becomes clearer.”
Market reaction
As of writing, USD/JPY is trading 0.09% lower on the day at 143.55.
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 embarked in an ultra-loose monetary policy in 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. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Author
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
