Today, Bank of Japan board member toyuki Nakamura warned that the country's economy is at a critical juncture, although it is recovering moderately and also said:
- Structural changes in the economy are necessary for Japan to achieve the inflation target set by the Bank of Japan at 2% sustainably and steadily.
- It is desirable that the currency market moves in such a way as to reflect the fundamentals.
- A sharp one-sided decline in the value of the yen increases uncertainty.
- The Japanese economy is not that strong yet.
- We need to look at the data to determine when to start curtailing bond purchases.
- I am neutral on whether and when the gradual reduction of bond purchases will take place.
- Raising interest rates at the policy meeting next week would be premature.
- Based on the current data, it is appropriate to keep the policy as it is at the moment.
- The transition of wages to inflation is still weak, but the situation is being closely monitored.
- The purchasing power of households is weak, and a strong increase in household disposable income is needed to boost spending.
- Personally, I'm not sure that wage growth will continue.
- It's hard to believe that companies, which have been focused on reducing costs for 30 years, will suddenly change their mentality in two years.
- Japan's consumption has been slow lately.
The Bank of Japan meets next week on June 13 and 14, and these seem to be signs that easy policy will remain in place for the time being.
This is one of the most pessimistic positions on the Bank of Japan's policy at the moment. There are strong expectations that they will reduce their bond purchases this month. But Nakamura is clearly not as supportive as he claims that the economy is still in a rather fragile state.
