BoJ governor: Japan economy likely to experience positive cycle
TOKYO: Bank of Japan (BoJ) governor Kazuo Ueda said the country’s inflation was accelerating as a trend as a tight labour market pushes up wages, reiterating the bank’s conviction that conditions for ending negative interest rates were falling into place.
Speaking in Parliament yesterday, Ueda said Japan’s economy was likely to experience a positive cycle, in which higher job and wage growth led to moderate rises in inflation.
“Service prices continue to rise moderately. Trend inflation is also gradually accelerating. We will guide monetary policy appropriately in line with such moves.”
Sources have said the BoJ was on track to end negative interest rates in coming months despite Japan’s economy slipping into a recession, on growing signs that companies would continue to offer bumper pay amid a tightening job market.
A Reuters poll showed more than 80 per cent of economists expect the BoJ to pull short-term interest rates out of negative territory in April.
Expectations that Japan’s borrowing costs will remain very low, however, have pushed down the yen to around 150 against the US dollar, a level seen by markets as heightening the chance of yenbuying intervention by Japanese authorities.
Finance Minister Shunichi Suzuki told the Parliament meeting that the authorities were closely watching currency moves with a high sense of urgency.
Suzuki said the government had no “defence line” that could trigger action, as it was focusing more on the degree of volatility in the exchange rate markets.