The main headlines of Oshida's speech as deputy governor of the Bank of Japan today were as follows:-
- The Bank of Japan will not raise interest rates aggressively even after the end of the negative interest rate. -
The real interest rate in Japan is in a deep negative zone, and monetary conditions are very accommodative.
- And we don't expect this to change dramatically.
- Uncertainty about the forecast remains high, but the probability of achieving our price target sustainably is gradually increasing.
- We expect that the economic recovery in Japan will continue, and the positive wage inflation cycle will strengthen.
- The consumer inflation rate has exceeded 2%, but this is mainly due to cost-increasing factors.
- No matter when we adjust the policy, we see the need to take steps in the field of communications and market operations to ensure that there are no destructive movements in financial markets.
- Before we introduced negative interest rates, the Bank of Japan applied 0.1% interest on excess reserves and the overnight rate moved in the range of 0-0.1%.
- If we return to this situation, it will be equivalent to raising the interest rate by 0.1%.
- More important is the future course of the short-term interest rate, which will be set at the appropriate level so that consumer inflation moves around the BOJ's 2% target.
- When we finish or modify the YCC, we will think about how to connect our bond purchase.
- The amendment to the YCC means allowing yields to move more freely but we will ensure that this does not lead to a significant change in the amount of our bond purchases, a sharp rise in yields.
- We would like to maintain a stable and favorable monetary environment.
- We expect that the prices for services will rise along with the increase in wages.
- The government and the Bank of Japan share a common understanding in guiding policy.
- The inflation rate will not reach sustainably to 2% unless accompanied by wage growth, and we will be keen to support the economy in order to achieve this.
- The focus in the future will be on inflation expectations and the degree of price dynamics, including wages.
