Continued easing tenaciously under the YCC to create an environment conducive to wage increases – Bank of Japan Governor | Reuters

TOKYO (Reuters) – On the 17th, Bank of Japan Governor Kazuo Ueda gave an overview of the “Report on Currency and Financial Control” (semi-annual report) at the House of Representatives Finance and Financial Services Committee, stating that the current situation is that the price target is not sustainable. “We have not yet reached a situation where we can foresee with sufficient certainty” a stable realization of the situation, he said. He said that by persistently continuing monetary easing under yield curve control (YCC, short- and long-term interest rate control), economic activity will be supported and an environment will be created in which wages will easily rise.

After giving an overview, President Ueda answered questions from each committee member. Regarding the consistency between the Bank of Japan’s monetary policy and the government’s new comprehensive economic package, he said, “The government and the Bank of Japan are in the same view of the price situation and the direction we are heading.”

Regarding trends in long-term interest rates, he reiterated his recognition that he “does not expect them to significantly exceed 1%,” but said that he will “carefully examine” trends in mortgage interest rates and corporate lending rates. .

Regarding exchange-traded stock funds (ETFs), he explained that as the price target gets closer to being achieved, the exit strategy, including ETF purchases, will be discussed and information will be disseminated appropriately. “If we decide to exit, we would like to consider ways to dispose of the ETF,” he said, while avoiding the Bank of Japan’s losses and “disturbing effects” on the market as much as possible.

The half-yearly report predicted that the underlying rate of increase in consumer prices would “gradually increase toward the 2% price target through fiscal 2025.” However, he pointed out that the uncertainty surrounding Japan’s economy and prices is “extremely high.” He said it was necessary to pay close attention to trends in the financial and foreign exchange markets and their impact on Japan’s economy and prices.

Regarding the economy, he expressed the recognition that it is recovering moderately. Looking ahead, “Although there will be downward pressure from the slowing pace of recovery in overseas economies, the economy will continue to recover moderately, supported by the emergence of pent-up demand, accommodative financial conditions, and the effects of government economic measures.” Stated.

(Takahiko Wada, Takaya Yamaguchi; Editing: Shiho Tanaka)

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