Bank of Japan Deputy Governor Masayoshi Amemiya said on the 20th that the more difficult issue in exiting from monetary easing policy is not the technology of money market operations, but rather “determining whether a virtuous cycle of wages and prices has really started and how the market reacts to it. There are two types of communication,” he said. He answered a question from Takeshi Shinkai (Constitutional Democratic Party) at a subcommittee of the House of Representatives Budget Committee.
Asked about the BOJ’s exit strategy, Amemiya said, “Once a virtuous cycle of wages and prices begins, there will naturally be discussions about an exit.” There are concerns that the market will be greatly confused in the exit phase, but he said, “There are various ways to deal with operational technology,” such as reducing the outstanding balance of government bonds and raising interest rates.
Masayoshi Amemiya, Deputy Governor of the Bank of Japan
Photographer: Kiyoshi Ota/Bloomberg
The large-scale quantitative and qualitative monetary easing (QQE) introduced in April 2013 under Governor Haruhiko Kuroda has been exerting its positive effects on the economy and prices. It is no longer deflation in the sense that it will fall.” However, he said that the price stability target of 2% has not been achieved, and that for the time being, “it is important to conduct appropriate policy management” in order to achieve the target.
During this time, he explained, “It became clear that there were difficult issues that could not be analyzed with a normal economic model,” such as the strength of the deflationary mindset in the Japanese economy. Monetary policy management has also shifted from a short-term decisive strategy that aimed to achieve the 2 percent inflation target in about two years, to a more sustainable framework that solves problems over time. Given the situation, it is still appropriate to continue with that policy at this stage.”
other remarks
- Carefully assess risks, including bubble risk
- Risk Accumulation in Financial Intermediation Functions, Detailed Inspection from Various Aspects
- Low interest rate policy is putting pressure on the profits of financial institutions, but lending attitudes have not become tough
- Declining strength of regional financial institutions is not directly linked to regional economic problems
On May 14, the government submitted to both houses of the House of Representatives and House of Representatives a proposal for the appointment of the next governor of the Bank of Japan, with the approval of the Diet. Previously, Amemiya, whose term ended on March 19, was seen as the front-runner to become the next president.
In response to Mr. Ueda’s proposal, the timing of monetary easing revision expected by the market has been brought forward. As a concrete measure, there are many voices that expect the current yield curve control (long-term interest rate control, YCC) policy to be abolished. Ueda told reporters on the 10th that the current monetary policy of the BOJ was appropriate and that “currently, it is necessary to continue monetary easing.”
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(Updated to add remark details)
