WASHINGTON (Reuters) – The director of Japan’s review of the International Monetary Fund (IMF), Ranil Salgado, said in an interview with Reuters on the 15th that the Bank of Japan’s Yield Curve Management (YCC) policy The outlook for continued domestic wage growth has strengthening, he said, and there may be room to change the long-term interest rate target later this year.
Salgado said this year’s spring labor offensive could be changing Japan’s wage dynamics with better-than-expected results. He said that attention needs to be paid to see if small and medium enterprises will follow the wage increases or if companies will continue to raise wages next year and beyond.
“From our perspective, barring a global shock, next year’s spring labor offensive should go pretty well,” he said.
Achieving a sustainable inflation rate of 2% is not yet in sight, so the ultra-loose monetary policy needs to be maintained, but if the BOJ is confident of a continued acceleration in inflation and wage growth, long term he said the interest rate could be refined the target.
He said that as long as short-term interest rates are zero or slightly negative, monetary policy can remain acceptable even if the long-term interest rate target is refined.
Asked if the conditions for refining the long-term interest rate target could be met by the end of the year, he said, “Our personal view is yes,” and added, “We’ve already advised (the BOJ) to think about that .’ he said.
