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Japan's Kishida vows to discuss roles of government, BOJ with new BOJ chief

Leika Kihara

TOKYO (Reuters) – Japanese Prime Minister Fumio Kishida said on Sunday that after he named a new BOJ governor, the Japanese government and central bank must discuss how they are guiding Relations with economic policy. Governor of Japan (BOJ) April.

The comments raised the possibility that the government may revise its decade-long blueprint with the central bank focused on beating deflation, a move that would lay the groundwork for future exit Japan The central bank’s ultra-loose monetary policy.

When asked who he would choose to be BOJ governor, Kishida said that when Kuroda’s term ends, it will be the “best fit for the job”

“The government and the BOJ must work closely together but also play their respective roles” to achieve price stability and higher wage growth, Kishida said in a program on public broadcaster NHK.

“Under the new BOJ governor, we have to discuss the relationship between the government and the BOJ,” said Kishida, who has the power to choose the central bank governor.

The Bank of Japan shocked market policy last month by widening its target range for 10-year bond yields to address market distortions, a move seen by investors as A prelude to future rate hikes.

Speculation is rife that the Bank of Japan may move further to phase out Haruhiko Kuroda’s massive stimulus by tweaking its yield control policy under the new central bank governor.

“In guiding monetary policy, policymakers must have a view on the economic outlook. Asked whether the Bank of Japan needs to adjust its ultra-loose policy, Kishida said it needed to be cautious with the market.” Communication and dialogue. The BOJ’s 2% target in recent months has achieved what Kuroda’s decade-long stimulus efforts have failed to achieve.

Kuroda believes the BOJ must maintain a near-term The possibility of rate hikes supports the economy until the current cost-push inflation shifts to demand-driven inflation with higher wages.

But his comments failed to dampen market sentiment towards the BoJ’s excess Expectations of a near-term adjustment in interest rates – easing policy, which critics blame for depressing bank profit margins, distorting bond market pricing and contributing to a plunge in the yen that drives up import costs.

“Japan The central bank must revise its unconventional monetary easing policy,” which has sparked a sharp depreciation in the yen, causing pain to households and businesses, mai leader Kenta Izumi of Japan’s opposition Constitutional Democratic Party said on Sunday. He told NHK programme.

Core consumer prices rose 3.7% y/y in November, and analysts expect inflation to remain above the 2% target for months ahead as companies continue to price in higher Costs passed on to households. Wage growth has lagged far behind inflation, with nominal wages up just 0.5% y/y in November.

The BOJ may raise interest rates in this month’s rate review, sources tell Reuters Its inflation forecast, emphasizing its firm belief that strong domestic demand will keep inflation around its 2% target on a sustained basis for the next few years.

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