BOJ chief candidate: BOJ’s Tuesday decision is first step in exiting easing

On Dec. 21, Takatoshi Ito, a strong contender for the post of Bank of Japan governor, said the central bank‘s policy adjustment to yield curve control (YCC) could be the first step in exiting its ultra-loose monetary policy.

There are growing signs that inflation is likely to stay above the BOJ’s 2 percent target, as cost drivers drive an aggressive price mechanism based on higher wages and stronger consumption, he said.

The hope is that the sharp rise in wages will spur demand, partly in response to high inflation this year. Maybe next year we’ll see demand-driven inflation and it stabilizes at 2%, which will be the basis for moving towards an exit from accommodative policy.