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28 Aug 2024
BoJ’s Himino: Our imminent task is to closely monitor financial market developments with high sense of urgency
Bank of Japan (BoJ) Deputy Governor Ryozo Himno is back on the wires, via Reuters, noting that “our imminent task is to closely monitor financial market developments with high sense of urgency.”
Additional quotes
BoJ’s monetary policy has to take into account numerous factors.
Our task is to closely monitor market developments for the time being.
Not having in mind specific levels, range for neutral interest rates.
Financial conditions are accommodative right now.
Believe main scenario remains that the US economy will make soft landing.
Don’t have any specific timeframe in mind when asked how long BoJ would need to monitor market to judge it has stablised.
Will adjust degree of monetary easing if outlook of economy, prices is likely to be achieved.
Likelihood of economy, price outlook being achieved would be affected by various factors including market developments.
Bank of Japan FAQs
The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan has embarked in an ultra-loose monetary policy since 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds.
The Bank’s massive stimulus has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy of holding down rates has led to a widening differential with other currencies, dragging down the value of the Yen.
A weaker Yen and the spike in global energy prices have led to an increase in Japanese inflation, which has exceeded the BoJ’s 2% target. With wage inflation becoming a cause of concern, the BoJ looks to move away from ultra loose policy, while trying to avoid slowing the activity too much.