Bank of Japan board member Asahi Noguchi said the central bank would begin to gradually dial back monetary accommodation if economic activity and prices continue to evolve in line with the BoJ’s current outlook. Speaking on Wednesday, he stressed that achieving “sustainable and stable” inflation requires a steady expansion in demand and a sustained rise in nominal wages, particularly across smaller firms and regional economies. Noguchi reiterated that the durability of wage momentum will determine whether underlying inflation can hold a steady path toward the 2% target.
Although headline CPI growth is expected to ease, he warned that localised chain reactions in price increases could re-emerge — similar to the recent run-up in food prices such as rice — as supply–demand tightness prompts firms to compensate for past delays in passing through costs. Noguchi also said the impact of U.S. tariffs on Japan’s economy has been limited so far.
He added that if the BoJ achieves its inflation target in the latter half of its projection horizon, the bank should adjust interest rates at an “appropriate pace” to stay aligned with that timeline, signalling a gradual and data-dependent normalisation path.
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JPY has been on a gradual upswing so far during the session.
This article was written by Eamonn Sheridan at investinglive.com.
