BOJ must eye rate hike, shift to more flexible policy, says ex-deputy governor – by fx_ross BOJ USDJPY
te target next year if the economy can withstand overseas risks, former deputy governor Hirohide Yamaguchi said.He said Japan is already seeing signs of "home-made" inflation, in which broadening price hikes heighten public perceptions that inflation will keep rising longer-term.There's a chance core consumer inflation may stay around 3-4% for a fairly long period/''
When prices start rising, it's very hard to maintain yield curve control" as long-term rates face upward pressure, he said.The remarks contrast with those of, who has dismissed the chance of a near-term rate hike on the view the recent rise in inflation will prove temporary." The BOJ must get rid of commitments that bind its policy, so it can respond flexibly and nimbly to changes in the economy as needed.Yamaguchi served as deputy governor for five years until 2013 under Kuroda's predecessor Masaaki Shirakawa. The 2013 statement he helped draft commits the BOJ to meet its 2% inflation "at the earliest date possible."While below the trendline resistance the bias is firmly weighed to the downside.
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