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MNI: BOJ's Easy End Not A Shift To Tightening Stance - Opinions

(MNI) TOKYO

The Bank of Japan board's decision to end easy policy settings last week did not represent a regime shift toward monetary tightening, but rather part of efforts to achieve the price stability target, one board member noted at the March 18-19 meeting, according to the summary of opinions released on Thursday.

A separate member noted there was no need for rapid rate rises, echoing Governor Kazuo Ueda's remarks following the meeting's conclusion. (See MNI BOJ WATCH: Ueda Says Rate Path Will Depend On Prices)

“The Bank would need to emphasise its cautious stance in the case of terminating the negative interest rate policy, as Japan's economy is not in a state where rapid policy interest rate hikes are necessary,” one member said.

Another member noted some allowance for the purchase of Japanese government bond buying is appropriate. “The Bank will continue its JGB purchases at broadly the same amount as at present," the member stated. "That said, in conducting the purchases, it is necessary that they continue to be determined flexibly by the Bank's market operation desk while taking account of market developments.”

FAVORABLE WAGE SURVEY

The board members were encouraged by the first results of wage hike survey by Rengo, with one member noting the provisional aggregate results were "higher than expected.”

“Prices are projected to be at around 2% while gradually transitioning to a desirable state in which they are supported by wages,” the member added.

A different member said, “Given the results of this year's annual spring labor-management wage negotiations to date, achievement of the price stability target seems to have come in sight to some extent, mainly due to price rises accompanying wage increases. Thus, significant progress has been made toward achieving the target.”

Another member said, “It is highly likely that the mechanism behind price developments will continue to be consistent with the price stability target, although the inflation rate could fall below 2%, mainly due to temporary factors.”

MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com
MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com

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