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Bank of Japan board member Asahi Noguchi:
-
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
-
Focus now is on the pace at which the policy rate will be adjusted
and at what level it will eventually stabilize - 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 economyin in a moderate recovery trend, but recently growth has stalled
more to come
This article was written by Eamonn Sheridan at www.forexlive.com.
