Reuters
Recent comments on BOJ's monetary policy
Monday May 31, 4:06 am ET
TOKYO, May 31 (Reuters) - A recovery in Japan's economy has raised expectations that deflation may be nearing an end, which could bring with it a change in the Bank of Japan's "quantitative easing" policy much sooner than expected.
The BOJ has pledged that the policy will remain in place until the year-on-year change in the core consumer price index stabilises above zero percent, but recent comments by central bankers suggest they are shifting their focus to how to abandon the current policy framework.
Following is a summary of recent comments by BOJ officials:
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BOJ DEPUTY GOVERNOR KAZUMASA IWATA, MAY 31
"What is important is for most Policy Board members to hold expectations that we will not return to deflation," he said. "In my view, prices at plus 0.1 to 0.2 percent do not meet that requirement."
BOJ POLICY BOARD MEMBER KAZUO UEDA, MAY 26:
"We cannot rule out the possibility (for price changes) to be in positive territory, but the conditions are not there (for the BOJ) to have this as our main scenario," he said, referring to the outlook for prices in the next year on Nikkei-CNBC.
IWATA, MAY 21:
"We agreed that fighting deflation is crucial, and the government and the BOJ should work as one," he said after a meeting with government officials.
BOJ GOVERNOR TOSHIHIKO FUKUI, MAY 21:
"We are continuing with our quantitative easing policy. We would like to keep communicating with the markets appropriately."
FUKUI, MAY 20, SPEAKING AFTER UNEXPECTEDLY STRONG GDP DATA
"We have not changed our cautious view on consumer prices just because we saw those figures.
"Achieving a year-on-year rate of zero percent in CPI would just be a passing point. Eventually we will have to indicate clearly how we will conduct monetary policy beyond that point. But it is too early at this point to plan details of that."
BOJ MONTHLY REPORT ON MAY 20:
"Japan's economy continues to recover gradually and domestic demand is becoming firmer." The report kept the BOJ's overall assessment of the economy unchanged from April.
IWATA, MAY 16:
"Japan has been making efforts to conserve energy and to seek other sources of energy, so the potential impact on the economy has become much smaller," he said, referring to higher oil prices.
"Many people are speaking as if a hard landing in China is a certainty, but I think concerns on the outlook have been exaggerated."
BOJ POLICY BOARD MEMBER MIYAKO SUDA, MAY 15:
"Under zero rates, the effect of monetary policy is mainly transmitted through expectations. Therefore, we should start thinking of what kind of exit policy to take when our commitment (to beat deflation) is achieved...in order to prevent misunderstandings."
"If there is a consensus on what is an ideal rate of inflation, and if simply showing a target rate will boost the central bank's credibility as well as help to stabilise prices and control inflationary expectations...there is no reason for us not to adopt that."
FUKUI, MAY 13:
"The BOJ will continue its extremely easy monetary policy in order to support private-sector efforts to deal with structural problems.
"The Bank of Japan should be extremely careful to avoid sharp fluctuations in financial markets and to prevent any sudden discontinuities in market conditions.
"It is particularly crucial for the government to maintain sound fiscal discipline and consider market demand in issuing bonds, to achieve stability in long-term interest rates.
"If there is a spike in long-term yields, monetary policy alone may not be enough to suppress it."
BOJ POLICY BOARD MEMBER SHIN NAKAHARA, MAY 12:
"One way to stabilise market expectations when we change our quantitative easing policy regime would be to indicate beforehand what sort of inflation rate the central bank finds appropriate. I think that 1-2 percent would be an appropriate goal in the end.
"The problem is, after 2005 we should see some negative factors emerge, and we may see the economy peak towards the end of fiscal 2004.
"Although the economy is definitely recovering, it's not clear that we have overcome deflation. As such, it is crucial for us to patiently continue with our quantitative easing."
FUKUI, APRIL 28:
"It is hard to foresee consumer prices turning positive later in this fiscal year or into next year."
BOJ TWICE-YEARLY REPORT ON PRICES AND ECONOMY, APRIL 28:
The central projection, which excludes the highest and lowest forecasts of the nine-member Policy Board, was for the core CPI to fall 0.1 to 0.2 percent in 2004/05, ending next March 31, compared with a decline of 0.2 percent in 2003/04 -- the sixth straight fiscal year of deflation.
FUKUI, APRIL 26:
"I'm not saying we cannot share or respect the goals set by the government. But we need to avoid having two targets," he was quoted as saying in the minutes of a meeting with government officials at which he was asked about the BOJ's commitment to an economic growth target.
FUKUI, APRIL 24:
"Geopolitical risks themselves are changing every day. It is crucial to try to ensure that markets can absorb such risks," he told reporters at a G7 meeting in Washington.
SUDA, APRIL 21:
"It is difficult to conceive of the current strength in consumer spending continuing for an extended period.
"With growth strengthening in the short term, there will be growth in supply, but the demand gap won't shrink, meaning less upward pressure on prices. For this reason it is hard to see consumer prices stabilising above zero in the near future."
FUKUI, APRIL 19:
"Changes in consumer prices have been around zero on a year-on-year basis recently, but looking ahead the temporary factors that have been bolstering prices will recede and we should see them staying slightly negative for a while."
BOJ'S "TANKAN" SURVEY, APRIL 1:
The headline figure for large manufacturers' sentiment improved to plus 12 in March from a revised plus 7 in December. It was the highest level in the closely watched index since June 1997, and the fourth straight quarter of improvement.
Indices for small manufacturers and non-manufacturers also showed improvement, suggesting that an export-led recovery of the past year is beginning to spread out. |
