Former Deputy Governor of Bank of Japan: "No Financial Policy Changes in Japan for the Time Being"

No Major Changes Expected in June-July Monetary Policy Meetings
"Too Early to Assert 2% Inflation Target Achievement
Many Indications Point to BOJ Policy Continuation"

As the Bank of Japan (BOJ) prepares for its monetary policy meeting on the 15th, experts predict that the central bank will maintain its ultra-low interest rate stance for several months without any policy changes.

On the 12th, Masazumi Wakatabe, former Deputy Governor of the BOJ, stated in an interview with Bloomberg, "It is still too early to say that the current level of inflation can be sustained stably."

Masazumi Wakatabe, Former Deputy Governor of BOJ
Photo by Yonhap News

Former Deputy Governor Wakatabe forecasted that it is unlikely that any measures related to normalizing monetary policy will be announced at the June and July monetary policy meetings. Although inflation continues to show an upward trend, it is still insufficient to say that the BOJ’s 2% inflation target has been stably achieved.

Japan’s consumer price index (CPI) for April rose 3.4% year-on-year, marking 20 consecutive months of increases. However, the BOJ maintains its stance that this may be a temporary phenomenon caused by rising energy and raw material prices and insists on continuing its monetary easing policy. Bloomberg reported, "BOJ officials believe there is no need to revise the yield curve control (YCC) policy, which involves unlimited purchases of government bonds to keep long-term interest rates within a certain range."

Former Deputy Governor Wakatabe also criticized market expectations betting on the abolition of the YCC policy. He emphasized that partially adjusting monetary policy and making a full-scale shift are fundamentally different. He added, "There is overwhelmingly more evidence supporting the continuation of the policy than the idea that the BOJ will change it," and mentioned that Governor Ueda is unlikely to make changes at the level of a full policy shift.

Meanwhile, a Bloomberg survey conducted in May among economists showed that two-thirds of experts predicted the BOJ would strengthen its monetary easing policy until July. The market had expected the BOJ to revise its monetary easing policy at the monetary policy meeting on the 15th. However, after Governor Ueda repeatedly stated his intention to continue easing, forecasts appear to have been revised.

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