Japan business lobby head: BOJ must normalize monetary policy as soon as possible

[December 18, 2023] By Tetsushi Kajimoto
 
TOKYO (Reuters) - Japan business lobby Keidanren chief Masakazu Tokura said on Monday the Bank of Japan must normalize monetary policy as early as possible, amid speculation the central bank could shift away from more than a decade of stimulus policy in the coming months.

Masakazu Tokura, chairman of Sumitomo Chemical Co. and next chairman of Keidanren, or Japan Business Federation, speaks during a news conference in Tokyo, Japan May 10, 2021. REUTERS/Issei Kato/File Photo

Speaking on the first day of the BOJ's two-day policy setting meeting, the outspoken Keidanren head said the central bank's stimulus policy, including negative interest rates, should be ditched in the "not so distant future".

He cited changes in real interest rates.

In the United States, inflation and real interest rates have stabilized, while in Japan, real interest rates may have turned into negative territory, prompting speculation Japan could alter its longstanding policy of monetary easing, Tokura said.

"I don't know if it happens this year, April or ... further down the road," he said of a monetary policy change.

"The BOJ is aiming to put a complete end to deflation so I understand they are cautious, making sure to make it right," he said.

Tokura added that business circles were striving to continue sustainable wage hikes and structural wage hikes if possible by raising base salaries next year as well.

"(The) market does not want interest rate policy that is not in harmony with fundamentals, which would kill the economy," he said.

(Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong and Jamie Freed)

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