BOJ's deputy governor highlights benefits of ending ultra-easy policy
By Leika Kihara and Takahiko Wada
TOKYO/Oita, Japan (Reuters) -Bank of Japan Deputy Governor Ryozo Himino said an exit from ultra-loose monetary policy, if done properly, will reap benefits for the economy, signalling that an end to decades of super-low interest rates may be nearing.
While signs from various data remain patchy, Japan is making «solid progress» in shifting firms away from practices that kept price and wage growth subdued, Himino said in a speech on Wednesday to business leaders in the southern city of Oita.
«The BOJ should carefully monitor the evolution of wages and prices, judge the timing of the exit, and design its process,» he said, adding that Japan's banking system was resilient enough to weather any stress that could emerge during the transition.
«If this is done properly, we could achieve a positive outcome from the exit because a wide range of households and firms would benefit» from rising wages and prices, he said.
The remarks by Himino, a former top bank regulator and currently one of the BOJ's two deputy governors, underscore a growing conviction within the bank that conditions for phasing out years of massive stimulus are gradually falling into place.
Himino said the BOJ will maintain its ultra-loose policy settings, consisting of a negative short-term interest rate and bond yield control, until sustained achievement of its 2% inflation target came into sight.
Aside from wage and price moves, the BOJ will scrutinise overseas developments, as well as the strength of domestic consumption and capital expenditure, in deciding when to exit, he said.
But he refrained from making predictions on when exactly the BOJ could end negative rates or bond yield control, stressing he had no pre-set
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