TOKYO (Reuters) – Bank of Japan policymakers last month discussed the need to review the side effects of prolonged monetary easing and the impact of a future exit from ultra-easy monetary policy debate. A summary of opinions released on Tuesday showed low rates.
The summary suggests that some policymakers are gradually opening up to the possibility of eventually withdrawing the aggressive monetary stimulus deployed by Governor Kuroda. Ten years ago.
Many on the nine-member board stressed the importance of maintaining ultra-easy policy for now to ensure wage increases are sufficient to compensate for rising household living costs, according to a summary of the October policy meeting.
But some are seeing signs that cost-driven inflationary pressures are building in the near term, with one warning that “significant inflation overshoots cannot be ruled out”.
“It is important to continue to examine how future exit strategies (from ultra-easy e-policy) will affect the market and whether market participants will be adequately prepared for this,” a member said.
While there is no immediate need to adjust monetary policy, the Bank of Japan must be mindful of the side effects of prolonged easing, according to another view cited in the abstract.
The comments underscore the divergence that has emerged between Kuroda’s call to keep monetary policy ultra-easy and the views of some other board members who are more open to the idea of exiting ultra-low interest rates in the future.
Japan’s core consumer inflation accelerated to an eight-year high of 3.0% in September, challenging the central bank to maintain its ultra-easy policy stance as the yen fell to 2024 determination the low point of the year pushed up import costs.
Haruhiko Kuroda ruled out the possibility of adjusting the Bank of Japan’s policy target, with short-term interest rates set at minus 0.1%, 10-annual bond yields, Inflation is expected to slow to below the BOJ’s 2% target for the next fiscal year.
However, critics point to the long-term easing of rising fees. The Bank of Japan’s relentless defense of its annual yield cap has led to a distortion in the shape of the yield curve, which is under upward pressure from rising global interest rates. It also pushed up the cost of raw material imports by devaluing the yen.
Some market players believe the Bank of Japan will adjust its yield curve control policy when Kuroda’s term ends in April next year.
At the October 27-28 meeting, the Bank of Japan Maintaining ultra-low interest rates and maintaining its dovish guidance cemented its unusual position as global central banks tighten monetary policy.
But it raised its price forecast and now expects core consumer inflation to hit 1.6% for both fiscal years 2023 and 2024 It rose 2.9% in the year to March 2023.