Bank Japan will revise statement 10 years ago
2022.12.17 14:09
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Bank Japan will revise statement 10 years ago
Budrigannews.com – Kyodo news agency reported on Saturday, citing government sources, that Japan’s government is set to revise a decade-old joint statement with the Bank of Japan (BOJ) that commits the central bank to achieving its 2% inflation target “at the earliest date possible.”
According to Kyodo, with the revision, Prime Minister Fumio Kishida will try to make the BOJ’s 2% inflation target more flexible and allow for adjustments.
According to Kyodo, Kishida will meet with a new BOJ governor, who will take over for incumbent Haruhiko Kuroda when his term ends in April, to go over specifics of how to change the statement.
Kyodo said that the new statement could change the language to make it clear that the 2% inflation target is a medium- to long-term goal rather than one that needs to be achieved quickly. It could also remove the phrase “at the earliest date possible.”
Kyodo stated that the revision may lead the BOJ to modify its ultra-loose policy to address the cost of prolonged easing, such as the sharp fall in the yen, which raises import costs.
The BOJ signed the joint statement with the government in 2013 and pledged to achieve its 2% inflation target “at the earliest date possible” under strong pressure from then-Prime Minister Shinzo Abe.
However, the BOJ’s years of heavy money printing under Kuroda, who was chosen by Abe, failed to bring inflation up to its 2% target, forcing the central bank to adopt a controversial policy of limiting the yield on 10-year bonds to around 0%.
Kuroda has emphasized the need to maintain ultra-loose policy in order to sustainably achieve the price goal, despite the fact that inflation has exceeded the BOJ’s target of 2%, primarily due to rising costs of raw materials.
However, sources have informed Reuters that the BOJ is reducing any indications that it might consider phasing out Kuroda’s stimulus when he leaves office next year, provided that major economic risks remain contained and wages rise.
The BOJ and the office of the prime minister did not immediately respond to requests for comment regarding the Kyodo report.
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Showing up in a parliament meeting on Nov. 28, both chief Kishida and BOJ lead representative Kuroda said they so need to amend the ongoing joint assertion.
There is a lot of speculation in the markets that the BOJ will change its ultra-loose monetary policy next year under a new governor.
