BOJ Seen Close to Ending Negative Interest Rate Policy

Tokyo, Dec. 7 (Jiji Press)--Expectations of the Bank of Japan ending its negative interest rate policy at an early date are growing in the wake of comments by BOJ policymakers. 
 

BOJ Governor Kazuo Ueda said at a House of Councillors Financial Affairs Committee meeting Thursday that "the year-end to next year will be even more challenging," suggesting that a critical moment for the central bank to determine whether wages and prices will go up in a balanced way is approaching.
 

Ueda also told reporters after meeting with Prime Minister Fumio Kishida the same day that he explained to Kishida about his ideas regarding the exit from the current unorthodox easing policy toward policy normalization.
 

"We're going to see if wages will rise next year as well," Ueda said.
 

The BOJ chief and the prime minister may have shared views concerning the goal of achieving sustainable inflation, a key condition for the bank's policy normalization, observers said.
 

BOJ Deputy Governor Ryozo Himino as well has talked about the exit.
 

In a speech in the city of Oita on Wednesday, Himino said: "(Ending the negative interest rate policy) would benefit wide-ranging households and firms by enhancing the virtuous circle of wages and prices. The exit stands a good chance of generating a positive outcome."
 

Himino's exit-related remarks were "more in-depth than expected," Naomi Muguruma, chief bond strategist at Mitsubishi UFJ Morgan Stanley Securities Co., pointed out.
 

Reflecting rising anticipation of higher interest rates, 30-year Japanese government bonds failed to attract demand in a Finance Ministry auction Thursday while the yield on the benchmark 10-year JGB issue rose 0.105 percentage point to 0.750 pct in interdealer trading the same day.
 

Pundits warn of risks associated with putting an end to the negative interest rate policy at a time when consumer spending is still slow due to high prices and U.S. economic indicators are signaling a recession.

"Not every economic condition green-lights (a policy change) in reality," Himino told a press conference after the speech.
 

The BOJ faces the difficult task of determining how certainly the virtuous wage-price circle can be realized, people familiar with the matter said.
 

END