by Leika Kihara
KUSHIRO, JAPAN (Reuters) – Inflation in Japan is “clearly in sight” of the set target, Naoki Tamura, a member of the board of governors of the Bank of Japan (BoJ), said on Wednesday, paving the way for a possible end of the central bank’s ultra-accommodative policy early next year.
This is the clearest signal to date from a BoJ official, who is anxious to first bring inflation and wages up sustainably before possibly initiating a change in monetary policy.
“About ten years have passed since the Bank of Japan began to work towards achieving its 2 inflation target in a sustainable and stable manner. I believe that achievement of this target is now clearly in sight” , Naoki Tamura said in a speech to business leaders.
For the moment, the BoJ must maintain its policy of monetary easing by monitoring the evolution of wages and prices, however added the former investment banker.
“But hopefully between January and March next year we will have more clarity” on Japan’s ability to sustainably meet the bank’s inflation target in light of wage and salary data. prices that will be available by then, he continued.
Even though inflation is already above the central bank’s 2% target, the BoJ has pledged to keep interest rates very low until there is more evidence than the current level. prices can be maintained.
“The important thing is to make decisions appropriately so as not to be late or early,” he stressed, adding that the pace and order of a change would depend on the economic conditions in place when standardization of bank policy.
“Abandoning negative rates will obviously be among the options if the BoJ were to normalize its policy,” he said.
In the bond market, yields on Japanese government bonds rose as investors deemed Naoki Tamura’s comments less dovish than those of BoJ Governor Kazuo Ueda, who said last week that core inflation of Japan was “still a little below our target”.
Even though Naoki Tamura is seen by the markets as a “hawk” among the nine-member BoJ board of governors, his remarks suggest that discussions over the timing of the end of the bank’s stimulus measures will intensify in the coming months.
(Reportage Leika Kihara; Claude Chendjou, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
