In an interview with the Yomiuri Shimbun over the weekend, Bank of Japan Governor Kazuo Ueda explained the tightening of monetary policy in July as “a mechanism to change the balance between the effects and side effects” of monetary easing measures.
The focus will now be on “a smooth exit”which the BoJ aims to prevent from having a significant impact on the market, Ueda added.
“The central bank could have enough data by the end of the year to determine whether it can end negative rates.”
“Once we are convinced that Japan will experience sustained rises in inflation accompanied by wage growth, there are several options we can take.”
“If we judge that Japan can achieve its inflation target even after ending negative rates, we will do so.”
The BoJ will “patiently” maintain an ultra-flexible policy: “Although Japan is showing incipient positive signs, the achievement of our objective is not yet in sight.”
“Wage increases are beginning to push up the prices of services. The key is whether salaries will continue to rise next year.”
“We cannot rule out the possibility that we will have enough information and data by the end of the year” about the timing of ending negative rates.
Source: Fx Street
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