Kazuo Ueda reiterated that monetary policy will remain loose for some time as policymakers will continue to buy government bonds.
The Zhitong Finance App learned that Bank of Japan Governor Ueda Kazuo reiterated that monetary policy will remain relaxed for some time because policy makers will continue to buy government bonds.
He told the audience at the Peterson Institute for International Economics in Washington on Friday that the Bank of Japan will eventually reduce the scale of debt purchases at some point in the future.
However, Kazuo Ueda added that the Bank of Japan thought it was “dangerous” to completely cancel its intervention in the bond market in March. At that time, the Bank of Japan raised interest rates for the first time in 17 years and ended the yield curve control plan.
Kazuo Ueda said that the Bank of Japan will act cautiously, while pointing out that if the basic price trend improves, it may raise interest rates further.
Kazuo Ueda explained the Bank of Japan's policy shift in March, saying that the strongest wage increase in decades helped raise the possibility that the Bank of Japan will reach its price target, which is enough to prove that the policy shift is reasonable.
In an interview earlier this month, Kazuo Ueda emphasized the possibility that the inflation trend will improve, implying that interest rates may be raised in the second half of this year. Economists believe that the recent accelerated depreciation of the yen may advance this schedule.
The core inflation rate has remained at or above the 2% target set by the Bank of Japan for two consecutive years, but the Bank of Japan said it still believes there is a long way to go to achieve this target in a sustainable manner.
On Friday, Kazuo Ueda did not hint at the time of the next rate hike.
According to a Bloomberg survey, about 41% of economists expect the Bank of Japan to raise interest rates again in October. With the exception of one economist, 54 economists all expect that next week's Bank of Japan meeting will not change policy.
Kazuo Ueda said that the Bank of Japan's policy changes and recent developments in the foreign exchange market have always been a hot topic of discussion with other officials in Washington.
Japan's Finance Minister Shunichi Suzuki and Japan's senior foreign exchange official Masato Kanda expressed their concerns about the weakening yen in Washington this week. Market participants believe this is a way to lay the foundation for intervention in the foreign exchange market.