BoJ’s Noguchi: Focus now is on the pace at which the policy rate will be adjusted

Bank of Japan (BoJ) board member Asahi Noguchi said on Thursday that the “focus now is on the pace at which the policy rate will be adjusted and at what level it will eventually stabilize.”

Additional quotes

Essential for BoJ to maintain ultra-loose monetary policy, seek balance in labour supply and demand.

Japan is seeing wage hikes unseen in the past via spring wage negotiations.

Essential to continue to maintain appropriate balance between labour supply and demand through the continuation of its accommodative monetary policy to achieve the 2% price target.

Japan must achieve positive wage-inflation cycle as soon as possible and for this, service prices must keep rising.

Last year’s spring labour-management negotiations have triggered an unprecedented wave of wage increases.

Another factor that is key is for small manufacturers to be able to smoothly pass on rising wage costs to prices.

If wage hike translates into higher prices, that will show through rise in service prices and this trend is clearly appearing.

Long-term neutral interest rate is highly likely to be lower than that of other countries.

At some point in future, it’s desirable to start shrinking BoJ’s balance sheet.

Steps BoJ decided in March is a move toward this direction of future shrinking of BoJ’s balance sheet.

I dissented to BoJ’s March decision since I thought it would be appropriate to maintain JGB buying under negative rate.

Rise in service prices not driven mainly by wage hikes yet.

Japan’s economy in moderate recovery trend but growth stalling recently.