The vice governor of the Bank of Japan, Shinichi Uchida, declared Wednesday that Japan’s economy has recovered moderately, although some weakness has been observed in some parts.
Key quotes
Japan’s economy has recovered moderately, although some weakness has been observed in some parts.
It is likely that Japan’s economic growth will be moderated due to the effects of commercial policies and others.
Uncertainty about commercial policies remains extremely high.
It is important to maintain a lax monetary policy to support the economy.
We hope to increase interest rates with economic and pricing improvements, if our scenario is performed.
We will judge if the economy and prices move in line with our forecast without any preconceived idea.
It is likely that Japan’s economic growth will be moderated and that underlying inflation is temporarily slow.
It is difficult to say from the current data how commercial conversations will result, or in which direction the national and foreign economies and markets will move.
Japanese and foreign economies seem to be at a critical point, with very high uncertainty.
Economic uncertainties will probably act as downward risks for inflation.
Cost pressure factors are raising inflation, mainly for food prices.
There are high uncertainties about Japan’s economy, and risks are biased down.The direct impact of US tariffs increases in Japanese companies will probably appear first in export profitability or export volume.
We will examine how such down and up risks affect our pricing perspective through the behavior of fixing wages and corporate prices.
We must adjust the monetary policy to better balance the risks and the loss from the perspective of maintaining economic and pricing stability.
The Bank of Japan aims to adopt an orthodox and robust monetary policy approach, especially because uncertainty is extremely high.
It is important to firmly support economic activity by maintaining accommodative financial conditions.
Large -scale monetary flexibility was a necessary policy, but there is no such thing as a free lunch.
Only when the Bank of Japan performs a successful exit can be judged that our monetary flexibility had a positive effect on Japan’s economy.
Market reaction
At the time of the publication, the USD/JPy pair drops 0.02% in the day to quote 146.58.
BANCO DE JAPAN – FREQUENTLY QUESTIONS
The Bank of Japan (BOJ) is the Japanese Central Bank, which sets the country’s monetary policy. Its mandate is to issue tickets and carry out monetary and foreign exchange control to guarantee the stability of prices, which means an inflation objective around 2%.
The Bank of Japan has embarked on an ultralaxa monetary policy since 2013 in order to stimulate the economy and feed inflation in the middle of a low inflation environment. The bank’s policy is based on the Quantitative and Qualitative Easing (QQE), or ticket printing to buy assets such as state or business bonds to provide liquidity. In 2016, the Bank redoubled its strategy and relaxed even more policy by introducing negative interest rates and then directly controlling the performance of its state bonds to 10 years.
The massive stimulus of the Bank of Japan has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to combat inflation levels that have been in historical maximums. Japan Bank’s policy to maintain low types has caused an increase in differential with other currencies, dragging the value of YEN.
The weakness of the YEN and the rebound in world energy prices have caused an increase in Japanese inflation, which has exceeded the 2% objective set by the Bank of Japan. Even so, the Bank of Japan judges that the sustainable and stable achievement of the 2%objective is not yet glimpsed, so an abrupt change of current monetary policy seems unlikely.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
