BOJ policymaker says need more time before phasing out stimulus
By Leika Kihara
KOBE, Japan (Reuters) -Bank of Japan board member Toyoaki Nakamura said on Thursday the central bank will likely need some more time before phasing out its massive stimulus, playing down the chance of a near-term end to its negative interest rate policy.
The remarks follow dovish comments from fellow board member Seiji Adachi on Wednesday warning against a premature exit from ultra-low interest rates, highlighting uncertainty on how soon the BOJ could roll back ultra-loose policy settings.
Nakamura said Japan's continued economic recovery, tight labour market and an increasing number of workers switching jobs are heightening the chance that wage growth will eventually exceed the pace of inflation.
But real wages fell from year-before levels for the 18th straight month in September as inflation hit 2.8% due largely to cost-push factors, he said, stressing the need to maintain ultra-loose policy for the time being.
«We haven't reached a stage where we can say with conviction that sustained, stable achievement of our 2% inflation target, accompanied by wage growth, is in sight,» Nakamura said in a speech to business leaders in the western Japan city of Kobe.
A former executive of electronics giant Hitachi (OTC:HTHIY) Ltd, Nakamura also warned of heightening uncertainty over the global outlook due to lingering inflationary pressure, the potential fallout from aggressive monetary tightening by major central banks and geo-political tension in the Middle East.
Stubbornly high inflation and the impact of aggressive rate hikes could push the U.S. economy into stagflation, while Europe is facing the risk of recession, he said.
In Japan, big firms appear more keen than before to hike wages though smaller firms,
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