Keidanren Chief Urges: In a bold statement on Monday, Masakazu Tokura, Chief of Japan’s influential business lobby Keidanren, asserted that the Bank of Japan (BOJ) must expedite the normalization of its monetary policy. Amidst growing speculation about a potential shift in the central bank’s long-standing stimulus policies, Tokura emphasized the need to discard the current stimulus measures, including negative interest rates, in the “not so distant future.”
Speaking on the first day of the BOJ’s two-day policy-setting meeting, Tokura highlighted the shifts in real interest rates as a key factor behind the push for normalization. Drawing a comparison with the United States, where inflation and real interest rates have stabilized, Tokura pointed out that in Japan, real interest rates might have entered negative territory. This has fueled speculation that Japan could be on the verge of a significant policy shift away from the prolonged monetary easing approach.
“I don’t know if it happens this year, April or … further down the road,” Tokura remarked about the potential timing of a monetary policy change. While acknowledging the BOJ’s cautious approach in addressing deflation, he stressed the importance of aligning policies with economic fundamentals.
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Beyond monetary policy, Tokura shed light on the efforts within business circles to ensure sustainable wage hikes. He mentioned that the goal is to continue such hikes, with a focus on structural increases if possible. Specifically, he indicated plans to raise base salaries next year to support the broader economic landscape.
“The market does not want an interest rate policy that is not in harmony with fundamentals, which would kill the economy,” Tokura added, underlining the significance of maintaining a balance in economic policies to foster growth.
As discussions unfold during the BOJ’s policy-setting meeting, Tokura’s remarks underscore the evolving landscape in Japan’s economic policies and the growing calls for a timely normalization of monetary measures. The outcome of these deliberations will undoubtedly have implications not only for Japan’s economic trajectory but also for global markets closely monitoring the central bank’s decisions.