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
