Bank of Japan monetary policy board member Hajime Takata in an interview with Japan’s Nikkei newspaper published on Saturday.
- Japan’s economy is not yet in a phase where the central bank can end yield curve control (YCC)
- too soon to start a discussion about concrete methods of ending yield curve control
- careful messaging would be needed when the time comes
Takata acknowledged that risks have built due to the prolonged period of ultra-easy policy.
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Takata is basically saying the same as Bank of Japan Governor Kuroda. Kuroda has repeated time and again that current policy is appropriate. This from just last week:
- when achieving the inflation target comes in sight the BOJ will likely debate a path towards an exit from easy monetary policy
- at present, though, the benefits of current monetary easing outweighs the costs
It pays to be aware that there is some murmuring in Japan about trimming back easy policy. From senior officials. As an example:
- BOJ’s Tamura says policy should be reviewed, says 2% CPI goal may be too high for Japan
- Possible BOJ Kuroda replacement says the Bank should review its policy
While an exit from YCC or any other leg of Japan’s current ultra-loose monetary policy is not imminent, its something to watch out for in the new year, most likely some time after Q1. Governor Haruhiko Kuroda’s finishes in April 2023. New blood could bring new ideas. The JPY is seeing a headwind from current policy, especially as most other DM central banks jack rates higher. A change to YCC or any of the other planks of easy policy would be yen supportive, at the margin.
Bank of Japan monetary policy board member Hajime Takata. Takata is one of two new board members appointed under Prime Minister Kishida.