National core inflation in Japan hit 4% in December, the highest annual rate since December 1981, according to data released last week.
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The Bank of Japan emphasized that it wants to maintain current monetary policy, including keeping yield curve control intact, the Bank of Japan reported. Summary of opinions from its last meeting announced on Thursday.
“Yield curve control” refers to a policy by the central bank of Japan designed to keep the 10-year yield on Japanese Government Bonds (JGBs) within 0.5 percentage points. Short-term interest rates in Japan are negative.
“Banks need to continue to control the current yield curve, considering the prospect that it will take time to achieve price stability [inflation] 2% target in a sustainable and stable manner,” the statement said, reiterating its unchanged stance on the inflation target.
The central bank continues to buy Japanese government bonds to cope with pressure to raise interest rates. The Nikkei reported Earlier this week, the BOJ technically disclosed holdings of more than 100% of a number of key 10-year JGBs – or above the issue amount.
Output per 10-year Japanese government bond was trading slightly higher on Thursday, but at 0.457% it is still well below the upper ceiling of the central bank’s tolerance range.
“There has been upward pressure on long-term rates and the yield curve distortion has not yet disappeared,” the BOJ said in its Opinion Summary, also referring to further purchases of JGB. as one of many possible actions they can take to keep interest rates down. yield curve in its preferred range.
MUFG Bank senior currency analyst Jeff Ng said he does not expect changes in the central bank’s stance before April, when it appoints a new governor.
Higher salary
Ng said that ongoing wage negotiations between unions and businesses are likely to keep inflation at historically high levels.
“If wages are negotiated and increase quite strongly compared to previous years, I think that could continue to put inflationary pressure on,” Ng said, adding that MUFG expected the yen Japan will rise to 120 against the US dollar .
Nikkei reported earlier this week that formal wage discussions among labor unions and business leaders across the country began on Monday.
semiconductor company Sumco pledged a 6% salary increase, Nikkei reported, noting that it would be the biggest pay rise since the company went public in 2005. lens committed to increase 3.8%, marking the first increase in basic salary in 20 years, while JGC Corporation pledged to increase employees’ salaries by 10%, according to Nikkei.
Uniqlo’s parents Quick retailmeanwhile, said it will salary increase up to 40%.
Ng added that all eyes will be on April, when the Bank of Japan convenes its first meeting under the new leadership of the central bank.
“When the new governor arrives, we think there may be a rethink of super-supportive policies – and the BOJ has been very supportive over the past decade or so, any change has become a big deal.” hawk axis compared to previous decades,” he said.
