BOJ Gov. Says Rate Hike Too Small to Harm Economy; Plan to Buy Fewer Bonds to be Subject to Interim Review

The Yomiuri Shimbun

18:06 JST, July 31, 2024

Bank of Japan Gov. Kazuo Ueda said Wednesday the increase in the policy interest rate decided by the bank on the day was too small to have a negative impact on the economy.

“The adjustment is done at such a low level in terms of the real interest rate that it will not have a negative impact on the economy,” Ueda said at a press conference held at the bank’s head office in Tokyo after its monetary policy meeting.

“We deemed the current state of the Japanese economy to be recovering moderately, although some areas are weaker than others,” he said. “In terms of wages, companies in a wide range of industries and sizes raised wages during shunto spring wage negotiations. In terms of prices, service prices continue to rise. Based on these facts, we have judged that a change in monetary policy is appropriate.”

Regarding the reduction of its purchases of Japanese government bonds, Ueda said that the central bank had decided at its last meeting to reduce the amount of purchases and since then has listened to the views of market participants. He also said that the bank will make an interim assessment of the plan at a June meeting next year.

“We would maintain the plan but may modify it as necessary,” he said. “If necessary, we may review the plan.”