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

BoJ's Noguchi
BoJ's Noguchi