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Bloomberg: BOJ Hikes Rates, No Indication of Further Tightening

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Bloomberg Mar 19 04:17 · 11.2k Views

The Bank of Japan scrapped the world’s last negative interest rate by hiking for the first time since 2007. According to a statement, officials indicated that financial conditions will remain accommodative, suggesting this isn’t the beginning of an aggressive tightening cycle of the sort seen in US and Europe in recent years. Stephen Engle reports from Tokyo on Bloomberg Television.

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Transcript

  • 00:00 They'd waited 17 years.
  • 00:02 Why couldn't they just wait a little longer for that April economic report to hike raise?
  • 00:10 Well, I guess they had the day that they needed.
  • 00:12 You're absolutely right.
  • 00:14 Most people when I was here on January 23rd
  • 00:17 when they decided to hold
  • 00:19 and
  • 00:20 everyone pointed to April would be the most logical time.
  • 00:23 By that time, of course, the spring wage negotiations would have been fully completed and also digested.
  • 00:29 And also you would have gotten that quarterly economic report
  • 00:33 that comes out next month
  • 00:34 and that just seemed like the right time.
  • 00:36 However,
  • 00:37 those wage negotiations ended up with much higher wage gains
  • 00:43 for corporate Japan than
  • 00:45 most expected
  • 00:47 in the first round on the Ringo on Friday essentially put
  • 00:52 you in a wage gains
  • 00:53 of 5.28%, much higher than the previous year of 3.8% and much higher than the consensus estimate of around 4.1%.
  • 01:02 So obviously
  • 01:04 the Governor Wei and the other eight members on the board of the Bank of Japan felt they had the data
  • 01:09 that this is a virtuous cycle of inflation
  • 01:13 backed by wage gains.
  • 01:14 That being said,
  • 01:16 one of the key lines in the statement is that they will maintain an accommodative policy stance
  • 01:22 and no indication of there's going to be necessarily
  • 01:25 further tightening, at least they're not telegraphing that right now.
  • 01:29 So
  • 01:30 perhaps it's one and done.
  • 01:32 We'll have to see going forward.