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Adachi said Japan has yet to see a positive wage-inflation cycle, in which wages and inflation rise together, kick off. The BOJ can start debating an exit strategy only when the chance of such a cycle emerging heightens, he added. But Adachi said the BOJ did not necessarily need to wait until inflation-adjusted wage growth turns positive for it to normalise monetary policy. Hawkish member Naoki Tamura in August signalled a chance of ending negative rates early next year, saying Japan's inflation was already "clearly in sight" of the BOJ's target. With inflation exceeding its 2% target for more than a year, many market players expect the BOJ to end negative rates and YCC next year, with some betting on a move as early as January.

Persons: Issei Kato, Seiji Adachi, Adachi, we're, Naoki Tamura, YCC, Leika Kihara, Takahiko Wada, Chang, Ran Kim, Jamie Freed Organizations: Bank of Japan, REUTERS, Thomson Locations: Tokyo, Japan, TOKYO, MATSUYAMA, Matsuyama

☆ Insight: BOJ makes bold shift as yen risks grow too big to ignore
▼ + stars: | 2023-08-03 | by ( Leika Kihara | ) www.reuters.com time to read: +9 min

The BOJ's decision shook markets on Friday and contrasted sharply with Ueda's more cautious comments in recent months about the dangers of retreating too quickly from accommodative Kuroda-era policies. "There's also a small but probable risk of inflation overshooting in Japan, which gave the BOJ reason to act." NEW PRIORITIESThe BOJ's policy decision last week signalled to investors that it would now allow the 10-year government bond yield to move closer to 1% before it intervenes. 'BIT BY BIT'The shift in thinking gained momentum at the BOJ's June policy meeting, but not enough to turn the tide. It was a test case, or a preliminary exercise, toward future policy normalisation," said former BOJ board member Takahide Kiuchi.

Persons: Issei Kato, Kazuo Ueda, Haruhiko Kuroda, Fumio, accommodative Kuroda, Ueda, YCC, There's, Hirokazu Matsuno, Seiji Adachi, Asahi Noguchi, Ryozo Himino, Shinichi Uchida, Uchida, Masato Kanda, Kanda, Takahide, Leika Kihara, Takaya Yamaguchi, Takahiko Wada, Kentaro Sugiyama, Yoshifumi, Sam Holmes Organizations: Bank of Japan, REUTERS, TOKYO, Bank, Ueda, Reuters, BIT, Asahi, Nikkei, Thomson Locations: Tokyo, Japan

☆ BOJ policymaker calls for keeping low rates, focus on wages
▼ + stars: | 2023-06-22 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Noguchi also warned of risks to Japan's economy, such as uncertainty over global economic and market developments. Under yield curve control (YCC), the BOJ sets a -0.1% target for short-term interest rates and caps the 10-year bond yield around 0% to reflate growth and inflation. With inflation exceeding its target, markets are simmering with speculation the BOJ will soon tweak YCC due to criticism the policy is distorting market pricing and crushing financial institutions' profit margins. BOJ Governor Kazuo Ueda has stressed the need to keep monetary policy ultra-loose until there is more evidence wages will keep rising next year, helping Japan sustainably hit the 2% inflation target. Reporting by Leika Kihara Editing by Chang-Ran Kim and Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

Persons: Asahi Noguchi, Noguchi, Seiji Adachi, Kazuo Ueda, Leika, Chang, Ran Kim, Sam Holmes Organizations: Noguchi, Global, Bank of Japan, Thomson Locations: Japan, TOKYO, Naha

☆ Dollar weakens as Powell's testimony offers little surprise; sterling steady
▼ + stars: | 2023-06-22 | by ( ) www.cnbc.com time to read: +2 min

The dollar languished near a one-month low against a basket of currencies on Thursday, after Federal Reserve Chair Jerome Powell stuck to his usual messaging at his semi-annual testimony, offering little room for surprise. The U.S. dollar index last stood at 102.05 in early Asia trade, not far from its recent five-week low of 102.00. Elsewhere, sterling rose 0.02% to $1.2770, not far from a one-year high of $1.2849 hit last week. Against the Japanese yen , the dollar slipped 0.06% to 141.82, having touched a seven-month peak of 142.37 yen in the previous session. The Japanese currency has come under renewed pressure as the Bank of Japan continues to stick to its ultra-dovish stance.

Persons: Jerome Powell, Sterling, Powell, didn't, Carol Kong, BoE, Seiji Adachi Organizations: Federal, Bank of, Capitol, U.S, Commonwealth Bank of Australia, ANZ, Bank of Japan Locations: U.S, Asia, Powell

☆ BOJ's Adachi sees only small chance of July policy tweak
▼ + stars: | 2023-06-21 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

"If market conditions don't change much from now, the chance of us tweaking yield curve control in July to arrest any distortion in the yield curve will be small," he said. The remarks were the strongest yet from a BOJ policymaker ruling out the chance of a policy tweak at the next meeting scheduled on July 27-28. Adachi said the BOJ must look at consumer price data for July onward to judge whether inflation was overshooting its baseline scenario. But there's high uncertainty over our baseline inflation outlook, so it's premature to tweak monetary policy," he said in a speech to Kagoshima business leaders. "The BOJ must humbly monitor price and wage developments, and respond not too quickly, but also not too slowly" the second member said.

Persons: Seiji Adachi, Adachi, Kazuo Ueda, Leika, Shri Navaratnam, Sam Holmes Organizations: Bank of Japan, Thomson Locations: KAGOSHIMA, Japan, Kagoshima

☆ BOJ's Adachi says it's premature to tweak ultra-loose policy
▼ + stars: | 2023-06-21 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

KAGOSHIMA, Japan, June 21 (Reuters) - Bank of Japan board member Seiji Adachi said it was too early to phase out ultra-loose monetary policy due to uncertainty over the price outlook, brushing aside expectations of an early tweak to its controversial yield curve control policy. "Amid huge uncertainty over the price outlook, there are upside and downside risks. "When considering whether it's appropriate to change monetary policy, we must carefully take into account such risks," he said. Adachi said distortions in the shape of the yield curve have dissolved, arguing that there was no need to tweak YCC now. But there's high uncertainty over our baseline inflation outlook, so it's premature to tweak monetary policy," he said.

Persons: Seiji Adachi, Adachi, Leika, Shri Navaratnam, Sam Holmes Organizations: Bank of Japan, Thomson Locations: KAGOSHIMA, Japan, U.S, Kagoshima

Banknotes of Japanese yen are seen in this illustration picture taken September 23, 2022. Bank of Japan Governor Haruhiko Kuroda also repeated his usual line that stability in the foreign exchange market was "extremely important", characterising the yen's recent softening as sharp and one-sided. The comments came as the yen traded near a 32-year trough to the dollar at 149 yen, putting the major psychological barrier of 150 in focus. "When looking at the global financial and economic environment surrounding Japan, downside risks are building up rapidly," Adachi said in the speech. "When downside risks are so high, we should be cautious of shifting toward monetary tightening," he said, warning that heightening external headwinds risked tipping Japan back to deflation.

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