TOKYO, Mac 20 (NNN-NHK) – Bank of Japan (BOJ) Governor, Kazuo Ueda, said yesterday that, further rate hikes will depend on how the economic and price situations develop, but that, aggressive hikes will be unlikely given the current environment.
Ueda addressed a press conference, after the BOJ decided earlier in the day, to end its negative interest rate policy, in its first rate hike in 17 years, marking a major shift away from the long-running monetary easing that Japan has seen over the past decade, to put an end to deflation.
The decision to depart from unorthodox monetary policy reflects the BOJ’s growing confidence about the prospect of the two percent inflation target being achieved stably and sustainably, Ueda said.
The negative interest rate policy, combined with other measures to inject money into the economy and keep borrowing costs low, “have fulfilled their roles,” he added.
The BOJ’s policy board also decided to scrap its yield curve control policy, under which the central bank bought large quantities of Japanese government bonds, to keep long-term interest rates at around zero percent, to maintain accommodative financial conditions.
Ueda said, long-term yields should be determined by market forces, but the central bank will try to prevent a spike by buying bonds when needed.
The widely expected move comes after robust pay increases that have heightened the BOJ’s confidence that Japan’s economy is now emerging from a protracted period of disinflation, and mild inflation will continue.
Chief Cabinet Secretary, Yoshimasa Hayashi, yesterday, expressed hope that the central bank will work together with the government to combat decades-long deflation.
“We hope that the BOJ will continue to closely communicate with the government, and manage monetary policy in a proper manner,” the top government spokesman said at a press conference.– NNN-NHK
