The member of the Bank of the Bank of Japan (BOJ), Naoki Tamura, said on Wednesday that inflation increased more than expected in May and it is difficult to predict perspectives. Tamura added that the Japanese Central Bank may need to act decisively if risks of upward price increase even more.
Outstanding statements
Inflation accelerates more than I expected in May.
The fog that surrounds the US tariffs. It is clearing a little.
But it is still difficult to predict the panorama.
The BOJ may need to act decisively if upward price risks increase even more.
I will not rule out the possibility of raising the rates to address the risks upwards in the midst of ongoing commercial conversations.
But that would require the price risks so large that the BOJ could be left behind.
For now, however, I do not believe that upward price risks justify a rise of imminent rates.
There is no pre -established idea about the time of the next rate rise.
It could come sooner or later, depending on tariffs and their impact on the economy.
Market reaction
At the time of publication, the USD/JPY torque rises 0.10% in the day, quoting 145.10.
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.
