BOJ's hawkish tilt suggests end to super-easy policy approaching
Bank of Japan policymakers are increasingly talking up the need to shift away from the massive monetary stimulus of the past decade, even as growing global risks heighten concerns about a fragile economic recovery.
A series of hawkish comments by BOJ speakers in recent weeks suggest the bank is preparing markets for an eventual policy change amid growing price pressures in deflation-prone Japan, analysts say.
Even dovish members of the BOJ board have expressed an openness to talk about a long-awaited exit from the extremely accommodative policy of former governor Haruhiko Kuroda, acknowledging changes in conditions may warrant a tweak in monetary settings.
Governor Kazuo Ueda told a newspaper interview on Saturday the BOJ could get enough data by year-end to judge whether conditions are in place to raise short-term interest rates.
Ueda's remarks, which pushed up the yen and bond yields on Monday, followed those of BOJ board member Naoki Tamura last month that suggested the bank could safely hike short-term rates without hurting the economy.
«Even if the BOJ were to end negative rates, it won't be scaling back monetary easing as long as it can keep interest rates low,» said Tamura, a former commercial bank executive.
The commentary contrasts in tone to the pro-growth posture adopted under Kuroda, an advocate of aggressive monetary easing to shock Japan out of its deflationary mindset.
It also suggests the BOJ under Ueda will be more inclined to prioritise unwinding the Kuroda-era policy framework, which has been blamed for distorting bond markets and crushing bank margin.
«The BOJ will proclaim that Japan has achieved 2% inflation and end negative rates in April,» said Mari Iwashita, chief market economist at Daiwa
