MNI BRIEF: BOJ's Noguchi Sees "Not Too Distant" Rate Hike
MNI (TOKYO) - Bank of Japan board member Asahi Noguchi said on Thursday the BOJ could raise the policy interest rate again in the "not too distant future," depending on economic data, without further elaboration.
“Japanese economy is fragile due to the downside risk as the underlying inflation hasn’t reached the 2% and the expected inflation hasn’t been anchored at 2%," Noguchi told business leaders in Nagasaki City. "But the [economic and price] conditions are improving steadily.”
However, he downplayed an imminent rate hike, saying it will take some time to establish a mindset consistent with the 2% target and the BOJ will need to maintain accommodative financial conditions patiently.
Noguchi is the most dovish board member and was against the March and July policy decisions.
He attributed market turmoil after the rate hike in July to a contradiction between the BOJ’s economic assessment and markets’ understanding. (See MNI POLICY: Fed Cut No Obstacle For BOJ Hiking Path)
The BOJ must grasp markets’ understanding of the Bank’s view and improve communications with market players to avoid unnecessary confusion in managing monetary policy, he added.