Asahi Noguchi, a member of the Bank of Japan (BoJ) board, articulated on Thursday that the trajectory of future rate increases is expected to be gradual, contingent upon forthcoming economic indicators.
Noguchi elaborated further, indicating that the BoJ will consider the impact of cost-driven inflation and implement policy adjustments if escalated wages precipitate higher prices. Additionally, he underscored the necessity of a significant duration before a positive economic cycle is firmly established.
Furthermore, Noguchi highlighted the escalating likelihood of attaining the 2% inflation target within approximately two years. He acknowledged the advantageous position of certain large corporations resulting from the yen’s depreciation, while cautioning about the potential ramifications of prolonged yen weakness on wage and price dynamics.
Emphasizing the importance of these variables in monetary policy deliberations, Noguchi iterated the BoJ’s vigilant monitoring of the prospect of achieving a sustainable 2% inflation trend. Regarding the potential for further rate hikes within the current year, he refrained from definitive statements, indicating a cautious approach.
Noguchi attributed the yen’s recent weakness partly to the unexpected robustness of the US economy. He emphasized the BoJ’s readiness to respond should wage hikes and labor shortages intensify, exerting upward pressure on prices.
Market Reaction:
At the time of reporting, the USD/JPY pair is consolidating near 154.30, experiencing a marginal decrease of 0.06% over the course of the day.
