TOKYO (Businesshala) – Bank of Japan board member Asahi Noguchi has stressed the need for the central bank to “patiently continue” its current monetary easing as it takes a long time to achieve its 2% inflation target amid the coronavirus pandemic. Is.
In a speech, Noguchi sounded cautiously optimistic on Japan’s economic outlook, saying its recovery would become clearer by the end of the year as the vaccine rollout helps mitigate the effects of the COVID-19 pandemic.
Noguchi said the downside risks also drew a lot of attention to the proliferation of variants as well as its effects on the auto industry’s supply chain, as uncertainty remains high.
“What is most notable in today’s speech is that Noguchi suggested that Japan is different from other countries that face rising inflation,” said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.
“It is true that global inflation was on the G20 agenda, while Japan is mired in deflation. As such, Noguchi indicated that there is no urgent need to change monetary policy.”
Noguchi, an academic who is a vocal supporter of mass easing, joined a board in April that was long divided among members wary of the rising costs of easing and proponents of incentives.
Under a policy dubbed Yield Curve Control (YCC), the BOJ dictates short-term interest rates at -0.1% and 10-year bond yields at around 0%. It also buys government bonds and riskier assets to achieve its elusive 2% inflation target.
However, years of over-lax policy have failed to boost inflation as weak consumption prevents firms from charging more for their goods and services, keeping inflation well below its 2% target.