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Bank of Japan deliberation committee statement
[Takamatsu 16th Reuters] -
The Bank of Japan deliberation committee member Adachi Seiji stated on the 16th that until the underlying inflation rate achieves the 2% target sustainably and stably, policy interest rates will be raised at an extremely slow pace while maintaining a basically accommodative environment. In order to achieve the 2% target, it is not enough to change the outlook at the moment, but he pointed out that “points requiring some attention have come out.” In addition to the possibility that the yen depreciation correction will intensify as the US interest rate falls, it was “somewhat cautious” about whether sufficient wage increases will continue next year.
They said hello at the financial and economic conference held in Takamatsu City, Kagawa Prefecture.
The Bank of Japan deliberation committee member Adachi Seiji stated on the 16th that until the underlying inflation rate achieves the 2% target sustainably and stably, policy interest rates will be raised at an extremely slow pace while maintaining a basically accommodative environment. In order to achieve the 2% target, it is not enough to change the outlook at the moment, but he pointed out that “points requiring some attention have come out.” In addition to the possibility that the yen depreciation correction will intensify as the US interest rate falls, it was “somewhat cautious” about whether sufficient wage increases will continue next year.
They said hello at the financial and economic conference held in Takamatsu City, Kagawa Prefecture.
Commissioner Adachi stated at the Kumamoto Prefecture Financial and Economic Conference held in May this year while the dollar/yen was approaching 160 yen, that “if the situation of excessive depreciation of the yen is prolonged and there will be an impact on price movements, and it is expected that it will affect the realization of price targets, response through monetary policy will also be an option.”
Commissioner Adachi mentioned the sense of uncertainty surrounding the US economy in his remarks on the 16th. They expressed a sense of caution that “there is a possibility that the economic policy of the United States will change drastically” not only in terms of who the next president will be in the US presidential election in November, but also depending on the power chart of both houses of the upper and lower chambers that received the results of the congressional elections to be carried out at the same time.
Regarding wage increases, he pointed out that this year's drastic wage increases “are being implemented within the scope of business performance expansion.” “Companies did not necessarily clearly change their wage increase stance from the deflation period,” he said.
＜The natural interest rate “supports the most careful estimates” and avoids hasty interest rate hikes ＞
Commissioner Adachi emphasized that the most important thing for gradual interest rate increases is maintaining an accommodative financial environment.
Regarding the natural interest rate, which is a guideline for measuring whether it is accommodative, Committee Adachi stated that “it is difficult to empirically identify highly reliable figures.” On top of that, he touched on the large range of estimates issued by the Bank of Japan, from about minus 1% to about plus 0.5%, and pointed out that there is currently no need to implement rapid interest rate hikes to control inflation, rather hasty interest rate increases should be avoided, and “it may be OK to think with the most careful estimates.”
Even in that case, I explained that the current real policy interest rate is sufficiently below the natural interest rate, and an accommodative environment has been maintained.
Commissioner Adachi mentioned the sense of uncertainty surrounding the US economy in his remarks on the 16th. They expressed a sense of caution that “there is a possibility that the economic policy of the United States will change drastically” not only in terms of who the next president will be in the US presidential election in November, but also depending on the power chart of both houses of the upper and lower chambers that received the results of the congressional elections to be carried out at the same time.
Regarding wage increases, he pointed out that this year's drastic wage increases “are being implemented within the scope of business performance expansion.” “Companies did not necessarily clearly change their wage increase stance from the deflation period,” he said.
＜The natural interest rate “supports the most careful estimates” and avoids hasty interest rate hikes ＞
Commissioner Adachi emphasized that the most important thing for gradual interest rate increases is maintaining an accommodative financial environment.
Regarding the natural interest rate, which is a guideline for measuring whether it is accommodative, Committee Adachi stated that “it is difficult to empirically identify highly reliable figures.” On top of that, he touched on the large range of estimates issued by the Bank of Japan, from about minus 1% to about plus 0.5%, and pointed out that there is currently no need to implement rapid interest rate hikes to control inflation, rather hasty interest rate increases should be avoided, and “it may be OK to think with the most careful estimates.”
Even in that case, I explained that the current real policy interest rate is sufficiently below the natural interest rate, and an accommodative environment has been maintained.
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