BOJ, Japan Inc need to prepare for ‘life with interest rates’, lobby head says
TOKYO –Japan‘s central bank and the private sector must prepare for positive interest rates and a normalization of monetary policy, an influential business leader said on Thursday, acknowledging that it could take a year to achieve.
Takeshi Niinami, chairman of business lobby Keizai Doyukai and who also heads Suntory Holdings, said the Bank of Japan “must normalize” monetary policy to help weed out incompetent firms and facilitate labor turnover towards growth industries.
The BOJ remains a dovish outlier amid a global wave of aggressive central bank policy tightening. Last month, it stuck to its negative interest rate policy targeting short-term interest rates at minus 0.1 percent.
READ: BOJ relaxes grip on rates as end to yield control looms
It also kept the 10-year government bond yield target around 0 percent under its yield curve control (YCC) policy, but redefined 1 percent as a loose “upper bound” rather than a rigid cap.
“The BOJ must make a move,” Niinami, who also serves as a private-sector member of a top government economic advisory panel, told Reuters in an interview. “We must live in a world that contains (positive) interest rates.”
Many private-sector economists speculate that the BOJ may phase out crisis-mode stimulus if regular wage talks due early next year result in workers’ pay rising more than prices.
“There must be quite a lot of political reservation about completely abandoning (current monetary policy settings),” he said. “That’s why the BOJ may be thinking it would be better off falling behind the curve.
READ: BOJ sees progress in hitting price goal, but not enough to end easy policy
“That should be taken as a message that the BOJ is leaving the YCC behind gradually,” Niinami said.
Niinami, who is also a former chairman of convenience store chain Lawson Inc, said in January that he expected the BOJ to lay out a clear policy roadmap, including criteria for ending its practice of controlling long- and short-term yields.
