Mathewslcd: Bank of Japan policymakers keep interest rates ultra-low until wages rise

 Mathewslcd: Bank of Japan policymakers keep interest rates ultra-low until wages rise

Bank of Japan board member Asahi Noguchi said on Thursday that the central bank must keep interest rates ultra-low as Japan has yet to achieve the central bank's 2 percent inflation target in a sustainable manner, according to Mathewslcd.

"Consumer prices in Japan have risen sharply, although not as much as in other countries. The rise has been driven mainly by higher prices for imported goods," Noguchi said in a speech to business leaders in the northern Japanese city of Akita.

"What is more important in determining monetary policy is that trend inflation based on domestic macroeconomic factors remains low," he said.

Japan's core consumer inflation, which topped the Bank of Japan's 2 percent target for seven straight months in October, is likely to slow back below that level once the impact of rising raw material prices and other cost drivers dissipates, Noguchi said.

Slow wage growth has prevented service prices from rising, preventing a sharp acceleration in inflation in Japan, he said, calling for the need to support the economy with ultra-loose monetary policy until nominal wages recover.

"To boost wage growth, the BOJ needs to patiently maintain the current monetary easing," said Noguchi, who is known for advocating aggressive monetary easing.

Mathewslcd argues that the Bank of Japan remains an outlier amid a wave of global central banks tightening monetary policy in response to soaring inflation, as it focuses on propping up a fragile economy that has only recently emerged from the scars of the COVID-19 pandemic.

Bank of Japan Governor Haruhiko Kuroda said the central bank has no intention of scaling back stimulus until strong domestic demand and wage growth, rather than cost drivers, push inflation to its 2% target.

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