Anna 
On Thursday, Bank of Japan (BoJ) board member Asahi Noguchi reiterated his cautious stance on several critical economic factors, addressing the challenges faced by the central bank. Key points from his remarks include:
Wage Growth Caution: Noguchi expressed skepticism about an acceleration in wage growth, underlining the central bank’s inability to be optimistic about it.
Inflation Dynamics: He pointed out that inflation is primarily driven by rising import prices, which encompass currency factors. Japan remains distant from achieving its 2% inflation target.
Interest Rate Approach: Noguchi emphasized that there is no need to rush into raising long-term interest rates and immediate adjustments to the bond yield control curve policy.
Real Wage Growth: He stressed the importance of attaining positive real wage growth and a goal of reaching wage growth close to 3%, although the timeline for this achievement remains uncertain.
Interest Rate Implications: Noguchi highlighted that achieving the 2% inflation target would entail higher interest rates.
Interest Rates and Inflation Expectations: He clarified that rising long-term interest rates do not necessarily reflect Japan’s inflation expectations but are influenced by U.S. bond yields. Inflation expectations in Japan remain weak, and they do not affect the achievement of the 2% inflation target.
Unexpected Inflation Level: Noguchi emphasized that inflation reaching this level was unexpected.
Monetary Policy Adjustment: Lastly, he cautioned against the misconception that rising interest rates would expedite adjustments to monetary policy.
Market Reaction:
Following Asahi Noguchi’s comments, the USD/JPY currency pair held steady at 149.00, with minimal fluctuations throughout the day. These insights into the BoJ’s policy perspective shed light on the ongoing challenges in Japan’s economic landscape.
