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☆ BOJ debated prospects of sustained inflation at July meeting - summary
▼ + stars: | 2023-08-07 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

Japan is expected to see a new phase where wages and services prices continue to increase," according to one opinion shown in the summary. Therefore, wages and selling prices could continue to rise at a pace that has not been seen in the past," another opinion showed. Governor Kazuo Ueda said the decision was a pre-emptive move against the risk of rising inflation pushing up long-term bond yields, and heightening volatility in financial markets. "If prices and inflation expectations continue to heighten, the effects of monetary easing will strengthen. On the other hand, strictly capping the 10-year bond yield at 0.5% could affect bond market function and market volatility," one opinion showed.

Persons: Kim Kyung, Kazuo Ueda, Leika, Chang, Ran Kim, Sam Holmes Organizations: Bank of Japan, REUTERS, Bank, Japan, Thomson Locations: Tokyo, Japan, TOKYO

☆ 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 debated inflation overshoot risk in June, offering insight into July tweak
▼ + stars: | 2023-08-02 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

A man walks at the headquarters of Bank of Japan in Tokyo, Japan, January 18, 2023. While some said they expected inflation to slow back below 2% as cost-push factors dissipate, one member said the risk of inflation staying elevated above the level "remained high." Several board members said service prices were rising in a sign domestic factors were playing an increasing role in pushing up Japan's inflation, the minutes showed. "We cannot rule out the chance we are underestimating the sustainability of inflation in Japan," one of the nine board members was quoted as saying in the minutes. The outlook for medium- and long-term inflation expectations was crucial to how the BOJ operates YCC, another member said.

Persons: Issei Kato, BOJ's, Shinichi Uchida, Leika Kihara, Tom Hogue Organizations: Bank of Japan, REUTERS, Thomson Locations: Tokyo, Japan, TOKYO

☆ Asia's factory activity shrinks as China's slump, global slowdown weigh
▼ + stars: | 2023-08-01 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Japan, South Korea, Taiwan and Vietnam saw manufacturing activity contract in July, the surveys showed, highlighting the strain sluggish Chinese demand is inflicting on the region. China's Caixin/S&P Global manufacturing purchasing managers' index (PMI) fell to 49.2 in July from 50.5 in June, missing analysts' forecasts of 50.3 and marking the first decline in activity since April. "Falling new orders, bleak employment prospects and high inventory levels point to subdued factory activity in the coming months." Japan's final au Jibun Bank PMI fell to 49.6 in July, down from 49.8 in June, due to weak domestic and overseas demand. In India, growth in manufacturing activity slowed for a second month, but the pace of expansion remained healthy and beat expectations.

Persons: forestalling, PMIs, Shivaan Tandon, Leika Kihara, Sonali Paul Organizations: PMI, TOKYO, P Global, Emerging, Capital Economics, Jibun, International Monetary Fund, Thomson Locations: Japan, South Korea, Asia, Taiwan, Vietnam, Emerging Asia, India

☆ BOJ flags broadening price, wage hikes in wake of policy tweak
▼ + stars: | 2023-07-31 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Price hikes have spread rapidly among Japanese companies and sectors that had previously been cautious about passing on costs to households, the central bank said. "We must continue to scrutinise whether price hikes to pass on higher costs could broaden and last longer," the central bank said in a full version of its quarterly outlook report. Unlike the United States and Europe, however, Japan is still seeing inflation driven by higher goods prices rather than wage pressures, the BOJ said. The assessment of the price and wage outlook came after the central bank's decision on Friday to tweak its bond yield control policy and allow long-term interest rates to rise in line with inflation. The outlook for wages and inflation expectations is crucial to how quickly the BOJ could move towards dismantling its controversial bond yield control policy.

Persons: Leika Kihara, Kim Coghill, Sam Holmes Organizations: Bank of Japan, Thomson Locations: TOKYO, United States, Europe, Japan

☆ After surprise tweak, what now for BOJ's yield curve control?
▼ + stars: | 2023-07-31 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

Since 2016, the BOJ has guided short-term interest rates at minus 0.1% and the 10-year government bond yield at around 0% in action known as yield curve control (YCC). It has also set an allowance band of 0.5% above and below the 10-year yield target. The BOJ was criticised by investors last year for distorting market pricing by defending the 0.5% yield cap with unlimited bond buying. The bank has forestalled the risk by deciding to intervene only when the 10-year yield could breach 1.0%. It may wait until the findings become available around May before raising interest rates.

Persons: Kazuo Ueda, Ueda, Leika Kihara, Christopher Cushing Organizations: Bank of Japan, U.S ., Thomson Locations: TOKYO, Japan

☆ Some at Bank of Japan baulked at ex-chief Kuroda's 'bazooka' stimulus, 2013 meeting minutes show
▼ + stars: | 2023-07-31 | by ( Leika Kihara | ) www.reuters.com time to read: +3 min

[1/2] Bank of Japan (BOJ) Governor Haruhiko Kuroda speaks during a news conference after attending the Monetary Policy Meeting at BOJ headquarters in Tokyo, Japan January 18, 2023, in this photo released by Kyodo. TOKYO, July 31 (Reuters) - Some Bank of Japan (BOJ) policymakers baulked at former chief Haruhiko Kuroda's idea of deploying a "bazooka" massive stimulus a decade ago, unconvinced central banks had the power to jolt public perceptions, accounts of the meeting released on Monday showed. Former banker Koji Ishida said he would propose reviewing the stimulus programme if no tangible results were seen one year into its launch, the minutes showed. Since then, the BOJ has capped long-term borrowing costs at about zero and has pledged to maintain ultra-low interest rates until its 2% inflation target is sustainably met and accompanied by wage growth. After serving two, five-year terms, Kuroda stepped down from the top BOJ post in March.

Persons: Haruhiko Kuroda, baulked, Haruhiko, Shinzo Abe, Kuroda, Masaaki Shirakawa, Hiroshi Nakaso, Takahide Kiuchi, Takehiro Sato, Sato, Koji Ishida, Leika Kihara, Jamie Freed Organizations: Bank of Japan, Kyodo ., Thomson Locations: Tokyo, Japan, Kyodo . TOKYO

☆ BOJ Governor Ueda's comments at news conference
▼ + stars: | 2023-07-28 | by ( ) www.reuters.com time to read: +4 min

Following are excerpts from BOJ Governor Kazuo Ueda's comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:BOND YIELD"We will not tolerate an increase in the 10-year bond yield above 1% and will step in if it does. ON WHY THE BOJ DECIDED TO MOVE NOW"The inflation forecast for this fiscal year has been revised up quite significantly. The bond market is pretty stable now and we saw uncertainty over the outlook very high. Given uncertainty over the outlook, we decided to pre-empt risks by setting 1% as a loose framework along with the 0% target and the 0.5% yield band." ON WHETHER THE MARKET'S SIDE-EFFECTS OF YCC INCLUDE VOLATILE CURRENCY MARKET MOVES"The BOJ does not target currency rates in guiding monetary policy.

Persons: Kazuo Ueda's, haven't, That's, we're, Leika Kihara, Subhranshu Sahu Organizations: Bank of Japan, Reuters, THE, Thomson Locations: Japan

☆ BOJ to keep ultra-low rates, may debate fine-tuning yield cap
▼ + stars: | 2023-07-27 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

At the two-day meeting ending on Friday, the BOJ is expected to maintain its yield curve control (YCC) targets at -0.1% for short-term interest rates and 0% for the 10-year bond yield. With the BOJ set to keep short-term rates negative, a tweak to the yield cap or allowance band is unlikely to trigger a spike in borrowing costs that would severely hurt the economy. There is no consensus within the board on how soon the BOJ should dial back stimulus. Former BOJ board member Takahide Kiuchi expects the central bank to eventually modify YCC, but stand pat on Friday. "I don't think the BOJ sees an imminent need to act, as markets aren't attacking its yield cap this time."

Persons: Ueda, Kazuo Ueda, Takahide Kiuchi, Leika Kihara, Takahiko Wada, Tetsushi, Takaya Yamaguchi, Yoshifumi, Kentaro Sugiyama, Sam Holmes Organizations: Bank of Japan's, Monetary Fund, Thomson Locations: TOKYO, YCC

Summary Tokyo July core CPI rises 3.0% yr/yr vs f'cast +2.9%Tokyo core inflation stays above BOJ's 2% targetInflation excluding energy accelerates in JulyData comes ahead of closely watched BOJ meeting outcomeTOKYO, July 28 (Reuters) - Core inflation in Japan's capital slowed in July but remained well above the central bank's 2% target, data showed on Friday, keeping pressure on policymakers to dial back ultra-loose monetary policy. The data for Tokyo, which is seen as a leading indicator of nationwide trends, comes ahead of the Bank of Japan's closely watched policy decision due later in the day. While the gain was slower than a 3.2% rise in June, Tokyo core inflation stayed above the central bank's 2% target for the 14th straight month. The dollar dipped slightly to around 139.03 yen after the release of the Tokyo inflation data. Reporting by Yoshifumi Takemoto and Leika Kihara; Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

Persons: Yoshifumi Takemoto, Sam Holmes Organizations: TOKYO, Bank of, Nikkei, Thomson Locations: Tokyo, Bank of Japan's

[1/2] European Central Bank (ECB) President Christine Lagarde speaks to the media following the Governing Council's monetary policy meeting at ECB headquarters in Frankfurt, Germany, July 27, 2023. The Bank of England is expected to raise rates again next week following similar positive inflation news. Meanwhile on Friday, the Bank of Japan opened the debate on plans to bring its ultra-loose policies to an end. The Fed's benchmark overnight interest rate now stands in the 5.25%-5.50% range, while the ECB's main rate is 3.75%. While bond markets took a cue from the faster growth, and pushed yields on Treasuries higher, the days of coordinated global tightening may be numbered.

Persons: Christine Lagarde, Kai Pfaffenbach, Jerome Powell, Powell, Lagarde, Krishna Guha, Howard Schneider, Francesco Canepa, Balazs Koranyi, Leika, Dan Burns, Paul Simao Organizations: European Central Bank, ECB, REUTERS, WASHINGTON, U.S . Federal Reserve, The Bank of England, Bank of Japan, Reuters, U.S, Graphics, Thomson Locations: Frankfurt, Germany, FRANKFURT, TOKYO, Europe, United States, Graphics New, Tokyo

☆ Bank of Japan may keep ultra-low rates, debate tweak to yield cap
▼ + stars: | 2023-07-27 | by ( Leika Kihara | ) www.reuters.com time to read: +4 min

The Nikkei newspaper reported the central bank will maintain its 0.5% cap for the 10-year government bond yield, but discuss allowing long-term interest rates to rise above that level by a certain degree. Under yield curve control (YCC), the BOJ guides the 10-year bond yield around 0% and sets an allowance band of 0.5% above and below that target. At the two-day meeting ending on Friday, the BOJ is widely expected to maintain the 10-year yield target and a -0.1% target set for short-term interest rates. The BOJ's meeting comes after the Federal Reserve's decision on Wednesday to raise interest rates, a move that further widens the interest rate gap between the United States and Japan. That changed last year, when soaring commodity prices pushed inflation above the 2% target and gave investors reason to attack the yield cap.

Persons: Ueda, Kazuo Ueda, Shinichi Uchida's, Leika Kihara, Sam Holmes, Conor Humphries Organizations: Nikkei, Bank of Japan, Reuters, Federal, Thomson Locations: TOKYO, United States, Japan

☆ IMF urges BOJ to move away from yield control, prepare for future tightening
▼ + stars: | 2023-07-25 | by ( Leika Kihara | Andrea Shalal | ) www.reuters.com time to read: +3 min

TOKYO/WASHINGTON (Reuters) -The Bank of Japan should start preparing for future monetary tightening by moving away from its yield control policy, the International Monetary Fund’s chief economist Pierre-Olivier Gourinchas said on Tuesday. FILE PHOTO: A Japanese flag flutters on the Bank of Japan building in Tokyo, Japan, March 15, 2016. They have also said the BOJ was mindful of the cost of YCC such as market distortions caused by its heavy bond buying. Widening the allowance band around its 10-year yield target, a step it took last December, could be among options to mitigate the side-effects of YCC, analysts say. Growth in the world’s third-largest economy is expected to slow to 1.0% in 2024 as the effect of past stimulus measures dissipate, the IMF said.

Persons: Pierre, Olivier Gourinchas, Toru Hanai, ” Gourinchas, Gourinchas, Kazuo Ueda Organizations: Bank of Japan, Monetary Fund’s, REUTERS, Reuters Locations: TOKYO, WASHINGTON, Tokyo, Japan

The remarks came amid simmering market speculation that creeping inflation and robust wage growth will prod the Bank of Japan (BOJ) to tweak its yield control policy at a two-day rate review ending on Friday. Under the joint agreement with the government signed in 2013 and re-confirmed by the current administration, the BOJ pledges to achieve 2% inflation at the earliest date possible. The remarks differ in tone from those made earlier on Monday by top currency diplomat Masato Kanda, who said recent inflation and wage rises were overshooting expectations. On Friday, Kanda told Reuters that "various expectations and speculations are spreading about the possibility of some kind of tweak to monetary policy." Sources have told Reuters the BOJ is leaning toward keeping its yield control policy steady this week, though there is no consensus within the bank.

Persons: BOJ, Kanda, Yoshihiko Isozaki, Isozaki, Isozaki's, Masato Kanda, It's, Kazuo Ueda, Leika Kihara, Kantaro Komiya, Kim Coghill, Lincoln Organizations: Bank of Japan, Reuters, Thomson Locations: TOKYO

TOKYO, July 24 (Reuters) - Japan's top currency diplomat Masato Kanda said on Monday recent inflation and wage rises were overshooting expectations, suggesting companies were changing practices that had been based on the assumption prices won't rise much. The central bank is likely to revise up its inflation forecasts at its two-day policy meeting ending on Friday, Kanda told reporters, adding that he was not in a position to comment on specific monetary policy. "It's become a shared view at home and abroad that changes are seen in Japan's corporate price- and wage-setting behaviour," Kanda told reporters. "If you add up data available so far, we'll probably see an upgrade in the BOJ's (inflation) forecasts," he said. On Friday, Kanda told Reuters that "various expectations and speculations are spreading about the possibility of some kind of tweak to monetary policy."

Persons: Masato Kanda, Kanda, It's, we'll, Kazuo Ueda, Tetsushi Kajimoto, Leika Kihara, Kim Coghill, Lincoln Organizations: Bank of Japan, Reuters, Thomson Locations: TOKYO

☆ Japan's top financial diplomat signals chance of BOJ policy tweaks
▼ + stars: | 2023-07-21 | by ( Tetsushi Kajimoto | ) www.reuters.com time to read: +2 min

TOKYO, July 21 (Reuters) - Japan's top financial diplomat on Friday suggested the central bank may tweak its approach to monetary stimulus at its next policy meeting, due to "signs of changes" in corporate behaviour on wage growth and price rises. In rare remarks on monetary policy, Masato Kanda, vice finance minister for international affairs, said he expects the Bank of Japan (BOJ) to make a judgment on policy by analysing the conditions and outlook for prices at every review. "Various expectations and speculations are spreading about the possibility of some kind of tweak to monetary policy," he said. The BOJ, under Governor Kazuo Ueda's predecessor Haruhiko Kuroda, launched an unprecedented round of monetary stimulus in 2013, pledging to inflate the economy to meet a 2% inflation target in two years. The BOJ is leaning towards keeping its yield control policy unchanged at next week's meeting, five sources familiar with its thinking said, as policymakers prefer to scrutinise more data to ensure wages and inflation keep rising.

Persons: Masato Kanda, Kanda's, Kanda, Kazuo Ueda's, Haruhiko Kuroda, Tetsushi Kajimoto, Leika Kihara, Satoshi Sugiyama, Andrew Heavens, Miral Fahmy, Sharon Singleton Organizations: Bank of Japan, Reuters, Thomson Locations: TOKYO

Yet, with services price growth also slowing last month, policymakers will feel that wage pressures have yet to build up enough to warrant an imminent tweak to the ultra-loose monetary stance. We'll likely see inflation slow in coming months, which would allow the BOJ to keep policy steady for the time being," said Toru Suehiro, chief economist at Daiwa Securities. "While services prices may rise next year, those for goods will stay weak. "If more firms hike wages and pass on the cost, services prices could overshoot," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute. "Inflation excluding food and energy will likely moderate ahead, but the pace of slowdown could be gradual."

Persons: We'll, Toru Suehiro, Kazuo Ueda, Yoshiki Shinke, Leika Kihara, Takahiko Wada, Sam Holmes Organizations: Bank of Japan, Daiwa Securities, Reuters Graphics Services, Dai, Research, Thomson Locations: TOKYO, Japan

Some market players bet the central bank could widen the allowance band set around its yield target to arrest market distortions caused by its heavy bond buying. With the 10-year yield moving stably below the 0.5% yield cap, however, many BOJ policymakers see no imminent need to take fresh steps against the side-effects of YCC, the sources said. Notwithstanding abrupt moves in the bonds and yen, the BOJ is likely to make no changes to its policy framework next week, they said. "We expect the BOJ will keep major policy levers unchanged next week," said Stefan Angrick, senior economist at Moody's Analytics. More than three-quarters of economists polled by Reuters said they expect the BOJ to keep policy steady including its yield control scheme next week.

Persons: Shinichi Uchida's, Kazuo Ueda's, Stefan Angrick, Leika Kihara, Takahiko Wada, Sam Holmes Organizations: Bank of Japan, Moody's, Reuters, Thomson Locations: BOJ, TOKYO

The nationwide core consumer price index (CPI), which excludes fresh food costs, rose 3.3% in June from a year earlier, matching a median market forecast. A hike in utility bills added to a steady increase in food and daily necessity prices, adding to the burden of households. But so-called "core core" inflation, which strips away both fresh food and fuel costs, slowed 4.2% in June from a 4.3% rise in May, a sign the rapid pace of increase seen in the past few months was moderating. As inflation perks up, markets are simmering with speculation the BOJ could soon phase out its controversial yield curve control (YCC) policy that is criticised for distorting market pricing and narrowing margins for financial institution. Under YCC, the BOJ guides short-term interest rates at -0.1% and buys huge amounts of government bonds to cap the 10-year bond yield around 0% as part of efforts to fire up inflation to its 2% target.

Persons: Kazuo Ueda's, Leika Kihara, Takahiko Wada, Sam Holmes Organizations: Bank of Japan, Thomson Locations: TOKYO, Japan

☆ BOJ launches forum with 60 firms on digital yen pilot programme
▼ + stars: | 2023-07-20 | by ( ) www.reuters.com time to read: +1 min

TOKYO, July 20 (Reuters) - The Bank of Japan on Thursday kicked off a series of discussions with 60 companies on a pilot programme for developing a digital yen, joining peers around the globe ramping up efforts towards issuing digital versions of their currencies for retail use. The discussions will touch on various themes including the business and technological features of retail settlements using a central bank digital currency (CBDC), the central bank said in a statement. The BOJ has said no decision has been made yet on whether Japan will actually issue a digital yen, which must be made by the government and parliament. But many big Japanese companies were included in the list of 60 firms selected to join the discussions, a sign Japan is moving steadily toward such a launch. Central banks around the globe have been studying and working on digital versions of their currencies for retail use to avoid leaving digital payments to the private sector amid an accelerating decline in the use of cash.

Persons: Lawson, Leika, Kim Coghill Organizations: Bank of Japan, Sony, Toyota, East Japan Railway, Bank for International Settlements, Thomson Locations: TOKYO, Japan, Central

Summary BOJ has kept easy policy with eye on market functionSustained achievement of BOJ's price goal still distantUeda's remarks come amid speculation of July policy tweakJuly 18 (Reuters) - Bank of Japan (BOJ) Governor Kazuo Ueda said on Tuesday there was still some distance to sustainably and stably achieving the central bank's 2% inflation target, signalling his resolve to maintain ultra-loose monetary policy for the time being. "We have patiently continued our ultra-loose monetary policy under yield curve control (YCC)," with due consideration to the impact on financial intermediation and market function, Ueda told a news conference after attending a G20 finance leaders' meeting in India. Ueda said the BOJ will scrutinise at each policy meeting the pace of progress Japan was making in sustainably achieving its 2% target. "If our assumption (that sustained achievement of 2% inflation remains distant) is unchanged, our overall narrative on monetary policy remains unchanged," he said. Reporting by Leika Kihara and Tetsushi Kajimoto in Tokyo; Editing by Bernadette Baum and Christina FincherOur Standards: The Thomson Reuters Trust Principles.

Persons: Kazuo Ueda, Ueda, Leika Kihara, Bernadette Baum, Christina Fincher Organizations: Bank of Japan, Reuters, Thomson Locations: India, Japan, Tokyo

☆ Analysis: BOJ in a bind as price pressures heighten case for early policy tweak
▼ + stars: | 2023-07-14 | by ( Leika Kihara | ) www.reuters.com time to read: +5 min

But there's no clarity on what the final decision would be," said one of the sources on the chance of a policy shift in July. Lately, however, BOJ policymakers been dropping signs that inflation is being increasingly driven by improving consumer demand. CREDIBILITY ON LINEThere is no consensus within the BOJ on how soon it should start dialing back stimulus. Proponents of early action point to the rising cost of YCC, such as market distortions caused by the BOJ's huge bond buying. "A July policy tweak would contradict the logic the BOJ had been using to justify keeping easy policy," said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

Persons: Kazuo Ueda's reassurances, Ueda, Naomi Muguruma, Mitsubishi UFJ, Mitsubishi UFJ Morgan Stanley, Leika Kihara, Kim Coghill Organizations: Bank of, Mitsubishi, Mitsubishi UFJ Morgan, Mitsubishi UFJ Morgan Stanley Securities, Tokyo, Thomson Locations: TOKYO, Bank of Japan

☆ Japan's wholesale inflation slows for 6th straight month
▼ + stars: | 2023-07-12 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Summary Wholesale prices rise at slowest annual pace since April 2021Rise in utility bills, food prices moderatesYen-based import prices fall at fastest pace since July 2020TOKYO, July 12 (Reuters) - Japan's wholesale inflation slowed for a sixth straight month in June due to sliding fuel and commodity prices, data showed on Wednesday, a sign the cost-push pressure that drove up consumer prices is steadily easing. The data underscores the central bank's view that consumer inflation will slow in coming months as global commodity prices slide from last year's peak levels. But the pace appears to be moderating," Masato Higashi, head of the Bank of Japan's price statistics division, told a briefing. The rise, which followed a 5.2% gain in May, was the slowest annual pace since April 2021, data by the BOJ showed. Food and beverage prices increased 7.4% in June, smaller than a 8.0% gain in May, the data showed.

Persons: Masato Higashi, Leika, Shri Navaratnam Organizations: Bank of, Thomson Locations: TOKYO

[1/6] A chef cooks tofu as he prepares a dish before the opening for dinner hour at Ukai, a traditional Japanese restaurant, in Tokyo, Japan, July 6, 2023. "There's no doubt rising wages and bonuses are among factors prodding customers to come dine with us despite the price hikes," said Ukai manager Yuka Hoshino. It is also drawing the attention of the Bank of Japan (BOJ), which is shifting away from its view the recent cost-driven inflation will prove temporary. "Japan is seeing early signs of progress in achieving inflation accompanied by higher wages," another source said, a view echoed by two more sources. The BOJ is changing its tone on the drivers of inflation and how they see progress made in sustainably hitting 2% inflation.

Persons: Kim Kyung, Hiroki Wakita, Yuka Hoshino, Kazuo Ueda, Teikoku Databank, Akihito Sato, Shohei Kanai, Ryozo Himino, Seisaku Kameda, Tetsushi Kajimoto, Sam Holmes Organizations: REUTERS, Reuters, Bank of Japan, Research, Workers, Thomson Locations: Tokyo, Japan, TOKYO, French, Ginza

☆ Bank of Japan deputy governor Uchida vows to keep yield control for now, Nikkei reports
▼ + stars: | 2023-07-06 | by ( Leika Kihara | ) www.reuters.com time to read: +2 min

Summary BOJ 'strongly acknowledges' side-effects of YCC - UchidaUchida rules out chance of early end to negative ratesJapan seeing signs of change in corporate behaviour - UchidaTOKYO, July 7 (Reuters) - Bank of Japan (BOJ) Deputy Governor Shinichi Uchida said the central bank will maintain its yield curve control policy from the perspective of sustaining ultra-loose monetary conditions, the Nikkei newspaper reported on Friday. With inflation exceeding its 2% target for more than a year, markets are simmering with speculation the BOJ will tweak yield curve control (YCC) - a policy that guides short-term interest rates at -0.1% and caps the 10-year bond yield around 0%. Uchida said the BOJ "strongly acknowledges" the side-effects of YCC such as the impact on market function, according to Nikkei. But the central bank must support the economy amid recent signs of change in corporate wage and price-setting behaviour, Uchida was quoted as saying. Reporting by Leika Kihara; Editing by Leslie Adler and Sandra MalerOur Standards: The Thomson Reuters Trust Principles.

Persons: Uchida Uchida, Uchida TOKYO, Shinichi Uchida, Uchida, YCC, Leika Kihara, Leslie Adler, Sandra Maler Organizations: Bank of Japan, Nikkei, Thomson Locations: Japan

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