2024-03-27 12:20:54
On March 27th, Bank of Japan Governor Kazuo Ueda (pictured) attended the House of Representatives’ Finance and Financial Services Committee meeting in the afternoon and stated that the Bank of Japan does not include foreign exchange rates in monetary policy management. The photo was taken in February in Sao Paulo, Brazil (2024 Reuters/Carla Carniel)
TOKYO (Reuters) – Bank of Japan Governor Kazuo Ueda told the House of Representatives Finance and Financial Services Committee on the 27th that the Bank does not include foreign exchange rates in monetary policy. He emphasized that the government will closely monitor trends in the depreciation of the yen and its impact on the economy and prices.
Regarding the exchange rate, Governor Ueda said, “I will refrain from making specific comments on movements or levels.” He also noted that “monetary policy does not directly control exchange rates.” “My understanding is that foreign exchange policy is under the jurisdiction of the Ministry of Finance,” he said.
He also stated that the Bank of Japan believes that foreign exchange rates are “a factor that has an important impact on the economy and prices,” and that the Bank of Japan will continue to closely monitor foreign exchange market trends and their impact on the economy and prices, while working closely with the government. I’ll go.”
Regarding future monetary policy management, he said, “Based on the current economic and price outlook, we believe that the accommodative financial environment will continue for the time being, and that the accommodative financial environment will work in a direction that firmly supports the economy and prices. I think that will happen,” he said. He only stated that how to deal with the situation will depend on the economic, price, and financial conditions at the time.
Regarding the level of short-term interest rates, “we carefully examine the outlook and risks for economic prices at each monetary policy meeting, and set them appropriately from the perspective of achieving the 2% price stability target sustainably and stably.” I’ll go.”
He also touched on government bond purchases, saying, “We will continue purchasing government bonds at the same level as before, and if long-term interest rates rise sharply, we will flexibly increase the amount of purchases.” He also expressed the recognition that “we do not expect lending rates, including mortgage interest rates, to rise significantly” following the revisions to large-scale easing.
He also expressed the belief that, as the virtuous cycle between wages and prices strengthens, “the growth rate of real wages will gradually turn positive in the future.” As for future options, he said, “I would also like to consider gradually reducing the amount of government bond purchases that will contribute to reducing the outstanding amount (of government bonds held by the Bank of Japan) at some point.”
Governor Ueda said, “The level of short-term interest rates of 0-0.1% is a sufficiently accommodative level,” and, with the 2% price stability target in mind, “I think it will take some time, but there is a high possibility that we will achieve the target.” ” he said.
On the other hand, Governor Ueda also expressed his belief that, “If economic and price conditions deteriorate significantly in the future, we will not rule out the possibility of using all means, including those we have used so far, if necessary.” Ta.
Regarding the discussion on how to utilize unrealized gains from ETF holdings, the bank said, “I will refrain from commenting specifically on individual proposals.” Regarding the disposal of ETFs, he said, “We are not thinking of doing it right away,” but added that “we need to take some time to consider how to handle them going forward,” including disposal.
When disposing of assets in the future, “one major policy is to do so for an appropriate price,” and “to avoid losses for the Bank of Japan as much as possible, and to avoid having a disruptive impact on the market.” We want to avoid this as much as possible, and take these into consideration when establishing guidelines for disposal.”
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