The Bank of Japan is setting the stage for an era of steady interest rate hikes by claiming victory in its long battle with deflation, sources and analysts...
TOKYO - The Bank of Japan is setting the stage for an era of steady interest rate hikes by claiming victory in its long battle with deflation, sources and analysts say, in a major review of past policy that nods to significant consumer behaviour shifts.
Two sources familiar with BOJ's thinking said the review will help the central bank make the case that Japan's economy can swallow the impact of a steady increase in current near-zero interest rates. Japan is on the cusp of eradicating a "deflationary norm," or the perception held by households and firms that prices and wages won't rise much, Uchida said in a speech on May 27, describing labour market changes as structural and irreversible.
After experiencing decades of mostly flat or negative growth, core inflation has now stayed above the BOJ's 2% target for well over two years to hit 2.6% in June. The BOJ's review won't lead to a change in its 2% inflation target, or its policy framework that combines an assessment of its baseline economic scenario with that of financial risks.
Haruhiko Kuroda Shinichi Uchida Inflation Target Rakuten Securities Economic Research Institute Interest Rate Core Inflation Kazuo Ueda Monetary Policy
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