The member of the Bank of the Bank of Japan (BOJ), Asahi Noguchi, declared Thursday that the Japanese economy is growing constantly. Noguchi added that the Central Bank is likely to continue adjusting the policy rate, while carefully evaluating if the underlying inflation would be stabilized around 2%.
Outstanding comments
Japan’s economy is growing constantly.
Japan’s economy is currently changing to a new phase where sustainable inflation is carried out, accompanied by salary increases.
The downward risks for the Japanese economy derived from foreign economies have increased rapidly due to US tariff policies.
The BOJ is likely to continue adjusting the policy rate while examining carefully if the underlying inflation would stabilize around 2%.
The BOJ should not pre -establish the terminal rate when the rates rise.
The BOJ should take its time to evaluate the impact of each rate increase in the economy, scrutinize the risks, before moving on to the next increase.
The 10 -year JGB performance rose about 1.6% in March, but I did not see it as disruptive since it reflected a change in market vision on the terminal rate.
Personally, I do not see the need to make great changes in the existing reduction plan of the BOJ.
As for the reduction plan for April 2026, we need to examine it with a longer term perspective.
The BOJ can take enough time to reduce its balance, doing so is desirable for market stability.
The BOJ is maintaining a lax monetary policy since the increase in inflation is mainly driven by import costs, not necessarily sustainable.
Monetary policy must focus on underlying price movements that are strongly linked to nominal salary developments.
The priced pressure promoted by salaries and domestic demand is not strong enough but is constantly increasing.
Our basic monetary policy position should be prevent in the policy adjustment while the economy and its risks are scrutinized.
Market reaction
The USD/JPY pair drops 0.25% in the day to quote at 143.30 at the time of writing.
Japan Faqs Bank
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.
