In today’s parliamentary session, BoJ Governor Kazuo Ueda emphasized a cautious stance on Japan’s monetary policy, acknowledging the need for more evidence before making any adjustments.
“We expect trend inflation to gradually approach 2 percent. But we’d like to wait until we have more conviction that sustained achievement of our price target comes into sight,” Ueda said.
Highlighting the significance of wage trends, Governor Ueda noted, “Whether wage hikes will broaden and become embedded in society, firms begin to hike prices on prospects of rising wages, will be key to judging whether inflation target will be met sustainably.”
He reaffirmed the Bank’s current strategy: “Until then, we will maintain negative interest rates and the yield curve control framework.”
The Summary of Opinions from the BoJ’s October meeting, released separately, showed a notable stance from one member suggested optimism about wage growth, “It’s highly possible that wage growth to be agreed in next year’s base pay negotiations will exceed that agreed this year,” and added that “achievement of the BoJ’s price target is coming into sight.”
One member went further to suggest that the chances of meeting the inflation target have increased, proposing that “It’s therefore necessary for the BOJ to gradually adjust the degree of monetary easing down from its maximum level.”
Another member’s opinion highlighted that adjustments in yield controls are not just a mitigation of side-effects but also pave the way for future policy normalization.
