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The central bank could revise up its price forecasts again in January, which would allow policymakers to justify pulling short-term interest rates out of negative territory, he said. "There's a chance the BOJ could end negative rates as early as January next year, if it judges that inflationary pressure is heightening," Maeda told Reuters in an interview on Wednesday. It also applies a charge to a pool of excess reserves to guide short-term rates at -0.1% under its negative-rate policy. Before adopting negative rates and YCC in 2016, the BOJ was pushing down long-term rates solely with a huge asset-buying programme called "quantitative and qualitative easing" (QQE). "After ending negative rates, the BOJ's policy would look quite similar to when it just had QQE," Maeda said.

Persons: Issei Kato, Eiji Maeda, Maeda, There's, BOJ, Leika Kihara, Gerry Doyle Organizations: Bank of Japan, REUTERS, Rights, Bank of, Reuters, Chibagin Research, Thomson Locations: Tokyo, Japan, Bank of Japan

Real wages adjusted for inflation fell in July for a 16th straight month in a sign households continued to feel the pinch from rising prices, separate data showed, boding ill for consumption. Exports remained solid in April-June with net external demand contributing 1.8% points to GDP growth, unchanged from the preliminary reading. But shipments to China slumped 13.4% in July to mark the 8th straight month of falls. Japan's economy has seen a delayed recovery from the COVID-19 pandemic this year, as rising living costs faltering global demand cloud the outlook. Given such uncertainties, Bank of Japan policymakers have stressed their resolve to keep monetary policy ultra-loose until the recent cost-driven inflation turns into price rises driven by domestic demand and higher wage growth.

Persons: Kim Kyung, Takeshi Minami, Yoshifumi Takemoto, Sam Holmes Organizations: Food, REUTERS, Norinchukin Research, Private, Bank of Japan, Thomson Locations: Soma, Fukushima Prefecture, Japan, TOKYO, China, Norinchukin

The finance ministry will set up a panel of experts as early as April to discuss the feasibility of issuing a digital yen, two sources with knowledge of the matter told Reuters. The step will come after the central bank's decision to start in April a pilot programme to test the use of a digital yen, moving Japan closer to issuing a CBDC in several years. The central bank has said the pilot programme may last for several years. Some laws may need to be revised if the government were to start issuing a CBDC for public use. Public broadcaster NHK reported on Thursday the finance ministry was considering setting up an advisory panel in April to discuss the possibility of a digital yen.

With the approval, government nominee Kazuo Ueda will officially succeed incumbent BOJ Governor Haruhiko Kuroda whose second, five-year term ends on April 8. But the BOJ's current policy is a necessary, appropriate means to achieve 2% inflation," Ueda told parliament last month, signalling that he was in no rush to hike rates. "I'll succeed the policy in the context of seeking to hit the BOJ's 2% inflation stably and sustainably," Ueda replied. Hiroshi Shiratori, a professor at Japan's Hosei University, see the appointment of Ueda as a sign Kishida wants the BOJ to phase out the legacy policy of Abenomics. "Ueda is saying the BOJ will maintain low rates for now.

The increase, which was the fastest pace in four decades, will likely underpin market expectations the Bank of Japan (BOJ) may phase out its massive stimulus by tweaking its yield control policy. The rise in the Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, exceeded a median market forecast of 3.8% and a 3.6% gain seen in November, government data showed on Tuesday. The last time Tokyo inflation was faster was April 1982, when the core CPI was 4.2% higher than a year before. The rise in Tokyo CPI heightens the chance nationwide consumer inflation likely stayed above the BOJ's 2% target in December. But Japan's long-term interest rates have crept up since the BOJ stunned markets last month by widening the band around its 10-year bond yield target, a move investors saw as a prelude to a future rate hike.

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