BOJ policymaker calls for slow movement on rate hikes
Picture used for illustrative purposes.
The comments from Bank of Japan board member Asahi Noguchi come a day after Japan’s new prime minister, Shigeru Ishiba, said the economy was not ready for further rate hikes, in surprisingly blunt remarks that pushed the yen lower.
Noguchi said the yen’s recent rally from “one-sided,” sharp falls seen in July has moderated inflationary pressure from import costs, allowing the BOJ time to scrutinise economic risks in determining when next to hike rates.
“If economic and price developments move in line with our forecasts, we will adjust the degree of monetary support albeit at a slow pace,” Noguchi told a news conference, adding the bank must make the decision “with extreme caution.”
“As it’s hard to come up with a concrete estimate on Japan’s neutral rate, we need to pause after hiking once to scrutinise the impact before raising rates again,” he said, adding the timing and pace of the policy shifts will be data dependent.
Noguchi declined to comment on Ishiba’s remarks but said the BOJ needed to take into account that various political views reflected public sentiment, even as it sets policy independently.
The dollar scaled a more than six-week high versus the yen on Thursday, due in part to receding expectations of a near-term rate hike by the BOJ. It briefly hit 147.25 yen, the highest since Aug. 20, before retracing some gains to stand at 146.80 yen.
Later on Thursday, BOJ Governor Kazuo Ueda, newly appointed finance minister Katsunobu Kato and economy minister Ryosei Akazawa met in Tokyo and reaffirmed that they would closely coordinate efforts to exit deflation.
“We reaffirmed that we would make sure to exit deflation and achieve growth sustainably with the government and the BOJ working closely in line with a joint statement,” Kato told reporters, referring to a 2013 statement that commits the central bank to achieve its 2% inflation target.
