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"I
think the BOJ has caught the indications that a virtuous cycle
between wages and prices has started," Keidanren Chairman
Masakazu Tokura told reporters.
As widely expected, the BOJ announced on Tuesday it would end
eight years of negative interest rates and other remnants of its
unorthodox policy. But analysts expect it will keep rates stuck
around zero for some time as a fragile economic recovery forces
it to go slow on any further rise in borrowing costs.
The central bank's decision was preceded by news of
stronger-than-expected pay rises by companies, raising hopes of
higher household spending that would feed into more durable
growth in the broader economy.
"Moderate price increases are favourable for the economy as a
whole, and we like the fact that the revision was conducted with
the 2% price stability target in sight," Ken Kobayashi, chairman
of the Japan Chamber of Commerce and Industry, said in a
statement.
With inflation having exceeded the BOJ's 2% target for well over
a year, many market players had projected an end to negative
interest rates either this month or next. In a sign future rate
hikes will be moderate, the BOJ said that financial conditions
will remain accommodative for the time being.
"As businesses and individuals, we will need to gradually
prepare for a world with interest rates," Takeshi Niinami,
chairman of the business lobby Keizai Doyukai who also heads
brewer Suntory Holdings, said in a statement.
"Full-fledged growth of the Japanese economy will not be
achieved by monetary policy alone," he added pointing to the
need for companies to do more in areas such as improving
productivity.
(Reporting by Maki Shiraki and Sam Nussey; Editing by Kim
Coghill)
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