Bank of Japan Board Member Takata says Japan’s economy is recovering moderately:
- Japan’s economy is recovering moderately, although some weak signs are seen.
- Stock and FX markets have seen big volatility, but we still see achievement of our inflation target in sight.
- We are seeing renewed rises in import prices.
- We must be vigilant to the chance of a renewed wave of price hikes, while taking into account the impact of the yen rise in early August.
- Hard to debate at this stage to what degree BOJ can shrink its balance sheet.
- Hard to pin down the precise level of Japan’s natural rate of interest.
- Japan’s current real interest rate is below the estimated natural rate of interest, which means monetary conditions remain accommodative.
- Fallout from market turbulence in early August remains, so we must scrutinize the impact for the time being.
- We must adjust monetary conditions by ‘another gear’ if we can confirm that firms will continue to increase capital expenditure, wages, and prices.
- We won’t hike the policy rate with a pre-set level of the neutral interest rate in mind.
There is nothing to concrete here from Takata on imminent policy steps from the BoJ. The marekt’s best guess for the next rate hike seems to be in December this year.
This article was written by Eamonn Sheridan at www.forexlive.com. Source