Bank of Japan (BoJ) Deputy Governor Ryozo Himino addressed Japan’s markets during a Bloomberg event on Thursday, outlining key insights into the country’s economic landscape.
In his speech, Himino noted, “We are witnessing record high corporate profits and record high wage increases in Japan.” He emphasized that if the economic and pricing outlook from the July report is met, the BoJ will consider raising interest rates accordingly. The policy board will evaluate data comprehensively, making decisions on a meeting-by-meeting basis.
Himino pointed out the existence of various real interest rates in Japan, all of which remain negative. He indicated that later this year, more data will be available regarding the impact of wage hikes on prices and the outcomes of next year’s wage negotiations. Additionally, insights into how the Yen-Dollar exchange rate affects inflation through import prices will be crucial.
The Deputy Governor highlighted that the BoJ may adjust monetary conditions if the board gains greater confidence in its economic outlook. As economic data evolves, he suggested that the focus might shift, with U.S. employment and consumption, as well as Chinese consumption, potentially warranting increased attention.
Himino also mentioned the importance of monitoring a wide range of data to identify developments not currently included in their risk scenarios. In a meeting with Prime Minister Ishiba, BoJ Governor Ueda reiterated the need for careful observation of domestic and international financial markets.
On the topic of communication strategies, Himino acknowledged the lack of a clear consensus among board members regarding future approaches. He stressed a collective commitment to learning from past experiences, particularly from events in August, in order to improve communication efforts.
Market Reaction: Following these remarks, the USD/JPY currency pair is testing the 149.00 level, reflecting a 0.16% decline on the day.
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