Ryozo Himino, Deputy Governor of the Bank of Japan (BoJ), sounded a note of caution on Tuesday regarding the prolonged implementation of easy monetary policy. In his remarks, he emphasized the necessity for policymakers to remain vigilant about its potential impact on the economy’s productivity and potential growth.
Himino highlighted that in environments where easy monetary policy persists over an extended period, there arises a need for careful monitoring of its effects on the economy’s productivity and its capacity for growth.
Expounding further, he noted that in scenarios where prices and wages experience moderate increases concurrently, firms are likely to enjoy greater flexibility in setting prices.
Moreover, in economies grappling with the effective zero lower bound, Himino pointed out that asset price fluctuations, including those of foreign exchange rates, stocks, and property, are expected to emerge as crucial channels through which monetary policy transmits its effects.
In alignment with the Bank of Japan’s objectives, Himino reaffirmed the institution’s commitment to guiding monetary policy towards achieving a situation where underlying inflation, excluding one-off factors, hovers around the targeted 2%.
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