Japan PM Kishida says appropriate for BOJ to keep easy policy

By Thomson Reuters Mar 28, 2024 | 7:20 AM

By Leika Kihara

TOKYO (Reuters) -Japanese Prime Minister Fumio Kishida said on Thursday it was appropriate for the central bank to maintain accommodative monetary conditions.

The government will continue to coordinate closely with the Bank of Japan to ensure wages continue to rise and the economy makes a complete exit from deflation, he said.

“Japan is experiencing a historical chance to make a full exit from deflation,” Kishida told a news conference.

“Some people may think that the government can declare that Japan is fully out of deflation. But we’re still half way there,” he added.

Kishida said his administration’s key mandate was to ensure companies and households pull out of a deflationary mindset.

“I will promise to ensure wages increase at a pace exceeding the inflation rate next year onward,” he said.

The BOJ ended eight years of negative interest rates and other remnants of its unorthodox policy last week, making a historic shift away from its focus on reflating growth with decades of massive monetary stimulus.

Kishida declined to comment, when asked by a reporter on whether the BOJ should hold off on raising interest rates too hastily. But he said he hoped the BOJ took into account the government’s focus on pulling Japan completely out of deflation, in guiding monetary policy.

Kishida also said he told BOJ Governor Kazuo Ueda in a recent meeting that it was appropriate for the central bank to shift to a new dimension in monetary policy, while keeping monetary conditions accommodative.

(Reporting by Leika Kihara; editing by Christina Fincher and Susan Fenton)