MNI BRIEF: BOJ's Adachi Sees Conditions For Normalisation
MNI (TOKYO) - Bank of Japan board member Seiji Adachi said on Wednesday conditions for policy normalisation had been satisfied, but the BOJ should avoid drastic monetary-policy adjustment.
“It is appropriate for the BOJ to raise the policy rate gradually,” Adachi told business leaders in Takamatsu City.
However, Adachi did not elaborate on when and how the Bank would raise the policy interest rate.
The BOJ must keep accommodative financial conditions and raise the policy rate at a very moderate pace until 2% underlying inflation is achieved in a stable and sustainable manner, he continued.
Accommodative financial conditions mean the real policy interest rate stays below the natural interest rate, he added. The Bank found estimating the neutral rate difficult as it varies depending on the model used, such as a range of -1.0% to +0.5% in Q1 2023, he said. (See MNI POLICY: BOJ Financial Index At Accommodative Levels)