Bank of Japan policy board member Takehiro Sato.
Speaking at a meeting with business leaders
- Japan economy likely to avert recession
- Global economic slowdown likely to continue for time being
- Companies have been cautious on capex, this trend may strengthen due to global market developments
- Negative rate policy may have dampened household sentiment
- QQE was 'shock' therapy, personally did not expect it to last for too long
- Negative rate policy may have monetary tightening, not easing effect on economy
- BOJ must take balanced approach in achieving its mandate of price stability and financial stability, but negative rate policy may hurt that balance
- BOJ must modify its current framework to one that is more suitable for long-term battle vs deflation
- Desirable to aim to achieve price target as a medium to long term goal
- Expect road towards achieving 2% inflation target will be long
More:
- Excessive interest rate declines could undermine people's confidence via negative effects on corporate finance
- Sceptical of idea that negative rate policy will stimulate capex
- Opinions divided on economic effects of negative rate policy, which is fuelling worries among people over this policy
- Believe it's unnecessary to persist in hitting 2 pct inflation target at all costs
- People aren't hoping for inflation that is not accompanied by income growth
- We have learned from experience that if inflation rises before income does, consumer sentiment worsens and hurts consumption
That comment I've highlighted .... bit of a biggie that one. The yen is strengthening on it as its being taken as evidence that further BOJ action may be further away than many think
Sato still nattering away:
- Sees JGB market vulnerability similar to before 2003 shock
