{"id":171966,"date":"2023-03-07T10:57:05","date_gmt":"2023-03-07T10:57:05","guid":{"rendered":"https:\/\/precoinnews.com\/?p=171966"},"modified":"2023-03-07T10:57:05","modified_gmt":"2023-03-07T10:57:05","slug":"incoming-boj-head-says-he-has-ideas-on-exit-from-ultra-easy-policy","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/incoming-boj-head-says-he-has-ideas-on-exit-from-ultra-easy-policy\/","title":{"rendered":"Incoming BOJ head says he has ideas on exit from ultra-easy policy"},"content":{"rendered":"

TOKYO (Reuters) -Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said on Monday he had ideas on how the central bank could exit its massive stimulus, but a shift to tighter policy would only come when the country\u2019s trend inflation heightens significantly.<\/p>

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The central bank will reduce its bond buying and likely head toward policy normalisation when sustained achievement of its 2% inflation target comes into sight, Ueda said.<\/p>\n

With trend inflation short of the BOJ\u2019s target, however, the central bank must maintain current ultra-easy policy for now, he added.<\/p>\n

\u201cBig improvements must be made in Japan\u2019s trend inflation for the BOJ to shift towards monetary tightening,\u201d Ueda said.<\/p>\n

\u201cIt\u2019s not that I have no ideas on how to tweak the BOJ\u2019s current policy. But the desirable tweak will vary depending on economic changes at the time,\u201d Ueda said, adding it was premature to comment on how the central bank may shift policy.<\/p>\n

Earlier this month, the government named the 71-year-old academic as its pick to become next central bank governor in a surprise choice that markets initially saw as heightening the chance of an end to the unpopular YCC policy.<\/p>\n

With core consumer inflation exceeding the BOJ\u2019s target, Ueda faces the challenge of phasing out yield curve control (YCC), which has drawn public criticism for distorting market functions and crushing banks\u2019 margins.<\/p>\n

While Ueda did not specifically define what constituted trend inflation, he said it was \u201cabove zero but short of 2%\u201d and serving as a key gauge of the BOJ\u2019s monetary policy decision.<\/p>\n

For now, the BOJ\u2019s ultra-loose policy was appropriate as the benefits of the policy, such as the boost to growth, exceeded the costs like deteriorating market functions, he said.<\/p>\n

\u201cIf trend inflation does not perk up, the BOJ must shift to a more sustainable policy or monetary easing framework to look after the cost of its stimulus,\u201d Ueda said.<\/p>\n

Ueda said he saw no need for now to change the BOJ\u2019s 2% inflation target, or language in a joint statement that the government signed in 2013 and commits the central bank to hitting the price goal at the earliest date possible.<\/p>\n

The upper house hearing follows testimony at the lower house of parliament on Friday, where Ueda stressed the need to maintain ultra-loose policy for now.<\/p>\n

Upon approval by parliament, Ueda succeeds incumbent Kuroda, whose second, five-year term ends on April 8.<\/p>\n

The nominations need the approval of both chambers of the Diet, which are effectively done deals as the ruling coalition holds solid majorities in both.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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