Bank of Japan: We will be very gradual in raising interest rates
Bank of Japan board member Asahi Noguchi said on Thursday, April 18, that the pace of future rate hikes is likely to be much slower than that of his global peers in recent tightening, as the impact of The increase in domestic wages has not yet been fully passed on to prices.
“As for the pace of policy rate adjustment, it is expected to be slow, at a pace that cannot be compared with that of other major central banks in recent years,” Noguchi said in the text of a speech published in BOJ website.
“This is because… it would take a reasonable time to reach a situation where prices continue to grow around 2% as a trend,” he said in the speech, which was delivered to business leaders in the southwestern city of Saga.
The BOJ ended eight years of negative interest rates and other remnants of its unorthodox policy last month, making a historic shift from its goal of spurring growth with decades of massive monetary stimulus.
In reality, Japan did not apply a brutal monetary tightening, given that interest rates went from -0.1% to zero, and therefore it was simply chosen not to exaggerate in controlling the interest rates of ten-year government bonds.
Investors are looking for clues on how soon the central bank will raise short-term interest rates again from the current range of 0 percent – 0.1 percent, with bets on the timing ranging from July to the final quarter of this year.
A former academic known for his dovish political views, Noguchi was among two dissidents on the nine-member BOJ board in last month's decision to end eight years of negative interest rates.
Noguchi said that Japan is seeing unprecedented wage increases, but that these increases alone are not yet powerful enough to push up prices and allow trend inflation to reach 2 percent . This figure is around 2.8% .
It must be said that these words were not heard on the currency market where the Yen seems stable, even if devalued against the dollar
Thanks to our Telegram channel you can stay updated on the publication of new Economic Scenarios articles.
The article Bank of Japan: We will be very gradual in raising interest rates comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/bank-of-japan-saremo-molto-graduali-nellaumentare-i-tassi-di-interesse/ on Thu, 18 Apr 2024 08:00:04 +0000.