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 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 BOJ will proclaim that Japan has achieved 2% inflation and end negative rates in April," said Mari Iwashita, chief market economist at Daiwa Securities and a veteran BOJ watcher.
Inflation has exceeded the BOJ's 2% target for more than a year as companies pass on higher costs to households. Firms also offered the largest pay hikes in three decades."I believe Japan's economy is finally seeing early signs of achieving the BOJ's 2% inflation target," said Hajime"We need to patiently maintain the current massive monetary stimulus.
Policymakers' recent remarks suggest the BOJ could act sooner than markets expect. A majority of analysts polled by Reuters insaw the BOJ scaling back stimulus only in a year's time. Less than half expect negative rates to end in 2024.
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