The Bank of Japan's deliberation committee members, Hajime Takata and Naoki Tamura attended the inaugural meeting on the 25th of July and expressed the recognition that the rapid depreciation of the yen would have an adverse effect on the real economy. Mr. Takada said that although the BOJ should not respond to the exchange rate itself, "exchange fluctuations affect the economy as a whole and financial markets" and "the BOJ will respond in a comprehensive sense. Of course, there will be. "



Mr. Takada, who is familiar with the bond market, pointed out that it is important to consider both the effects on the macro economy and the side effects seen in the financial markets for yield curve control (YCC).


Mr. Takada pointed out that "large fluctuations in exchange rates increase uncertainty about the future." It is necessary to stabilize the exchange rate, and "it will be necessary to take overall policy measures while responding to such issues," 


Regarding YCC, Mr. Takada said that "easy monetary policy has been realized" through lower lending rates and procurement costs in the capital markets. "Macro improvements have also been seen," such as corporate profits and tightening of the labor market.


However, he said that the interest rate of financial institutions has shrunk due to the long-term low-interest rates, and the decline in the functionality of the government bond market has become an issue. I will think about it while thinking about what kind of situation the appropriate yield curve is in. "


Negative interest rates also have the effect of lowering credit costs and positive movements in corporate activities, while affecting the profits of financial institutions. Isn't it? "


In June, interest rates were under upward pressure, and the Bank of Japan strengthened its purchases of government bonds to keep 10-year interest rates at the permissible upper limit of 0.25%. Mr. Takada said that the upper limit of 0.25% was set based on last year's policy check and is a "sustainable situation."


Regarding the exit strategy, he said, "It's not the situation at this point, but it's an issue that should always be considered."


As a result of large-scale monetary easing, Mr. Tamura evaluated the Japanese economy as "significantly improved" compared to 10 years ago. 


At the monetary policy meeting in July, the Bank of Japan raised its inflation outlook for 2022 to 2.3%, which exceeds the target of 2%, but Governor Haruhiko Kuroda said that he would be able to achieve a sustainable and stable price target. It emphasizes that it has not reached.


Mr. Takada pointed out that "the idea and air that presupposes that prices and wages are difficult to rise have taken root in society as a whole for a long time." He said that the shift took longer than expected, and he said, "I think the correct answer is to be patient and take a sustainable approach while achieving price targets."


From experience in the sector, he also pointed out that "Japanese individuals are more risk-averse than those in Europe and the United States, leading to lower prices."


Both Mr. Takada and Mr. Tamura said that although the Japanese economy is on a recovery trend, it is necessary to pay attention to the downside factors of the economy such as the infection trend of the new coronavirus, the slowdown of overseas economies, and the situation in Ukraine.


Mr. Takada said, "The Japanese economy is in the process of improvement as a keynote," but "has unpredictable uncertainties," such as the uncertainty of the corona and concerns about a slowdown in overseas economies.


Mr. Tamura said that a series of risk factors "will have different impacts on the Japanese economy depending on how much impact they will manifest. At this point, we cannot predict how much the impact of downside risks will be, so we will take a closer look and make a decision. There is no choice but to deal with it. "