Interest rate hikes will be at a very slow pace, and inflation targets need “some caution” – BOJ member Adachi

On October 16, Bank of Japan Adviser Seiji Adachi said that until the rate of core price inflation reaches the 2% target in a steady and stable manner, the environment will remain largely accommodative, but the rate of inflation will be very slow to pick up the policy interest rate at a rate consistent with the current rate. This photo is of the Bank of Japan headquarters. Photo taken in January in Tokyo (2024 Reuters / Kim Kyung-Hoon)

[Cathair Takamatsu, 16mh (Reuters)]- Bank of Japan Adviser Seiji Adachi said on the 16th that the Bank of Japan will basically maintain a supportive environment until the inflation rate achieves the target of 2% in a stable and sustainable manner. he said he would continue to raise policy interest rates at a very slow pace. To achieve the 2% target, it is not enough to change the view at this point, but he said that “some points have come up that need some attention.” potential for the yen’s depreciation to strengthen as the US enters a period of interest rate cuts, we are “taking a rather cautious view” on whether sufficient wage growth will be sustained next a year

I gave a speech at a financial and economic conference held in Takamatsu City, Kagawa Prefecture.

In his speech on the 16th, Commissioner Adachi referred to the uncertainty surrounding the US economy. US economic policy could change dramatically, depending not only on who will be the next president in the US presidential election in November, but also on the balance of power between the two houses of the Congress following the results of the corresponding parliamentary elections. he said with care.

Regarding salary increases, the company indicated that the significant salary increases this year “are only being implemented within the scope of business performance expansion.” “Companies may not have changed their position on wage increases since the inflationary period,” he said.

Commissioner Adachi emphasized that the key to gradually increasing interest rates is to maintain an appropriate financial environment.

Regarding the natural interest rate, which is a guideline for measuring whether the government is adequate, Commissioner Adachi said, “It is difficult to identify a reliable figure empirically. He also said that the estimates given by the Bank Japan passed widely varying, from about -1% to about +0.5%, saying that there is no need to increase interest rates at a rapid pace to prevent inflation at this point rate increases should be avoided, and he said it might be better to use the most conservative estimates.”

He explained that even in that case, the current policy interest rate is significantly lower than the natural interest rate, and that a suitable environment can be maintained.

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