A piece from Reuters, citing:
- Takeo Hoshi, an academic with close ties to incumbent central bank policymakers.Is an economics professor at the University of Tokyo.
He says:
- The BOJ must maintain ultra-loose policy for the time being to convince the public that it is serious about reflating the economy long enough to generate sustained inflation,
- But the central bank must also guard against the risk of inflation well exceeding its expectations, as intensifying labour shortages lift wages not just for part-time but permanent workers
- With inflation expectations already "sufficiently" high, core consumer inflation could exceed the BOJ's 2% target next fiscal year, and open scope for the central bank to abandon its 0% target for the 10-year bond yield
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Note that BOJ Governor Kuroda has ruled out withdrawing stimulus unless the recent cost-push inflation is accompanied by higher growth in wages. Indeed, Kuroda has said time and again he expects Japanese inflation to begin to fall from the middle of the next fiscal year (which begins on April 1).
Also, wage data today was not supportive of Takeo Hoshi's view:
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ps. The Bank of Japan is in the JGB markets again with a bid to buy an unlimited amount of 5 - 10 yr bonds. No pivot today!!!!
