In a speech today, BoJ Board Member Seiji Adachi suggested that Japan’s economy has met the conditions for beginning to normalize its ultra-loose monetary policy. He pointed to the firm economic outlook and broadening price increases as positive signs.
However, Adachi emphasized the need for caution, stating that until underlying inflation sustainably reaches the 2% target, Japan must maintain an “accommodative” financial environment. He added that any interest rate increases should be at a “very moderate pace.”
Adachi also stressed the importance to “avoid raising rates prematurely”, suggesting that BoJ should use the “most conservative estimate” when considering policy adjustments.
“Given high uncertainty surrounding global developments, there is significant uncertainty over next year’s wage developments in Japan. We must carefully monitor the situation,” Adachi added.
