Bank of Japan officials see the possibility of having a policy review next year, after wage growth and any slowdown in the global economy are closely examined, according to people familiar with the matter.
(Bloomberg) — Bank of Japan officials see the possibility of having a policy review next year, after wage growth and any slowdown in the global economy are closely examined, according to people familiar with the matter.
The need to monitor developments in still uncertain factors make any review unlikely before Governor Haruhiko Kuroda ends his decade-long term in April, according to the people.
That includes the preliminary results of the annual spring wage negotiation talks, which typically come around mid-March. If the discussions follow most years’ pattern, the wage results will come after Kuroda’s final policy meeting, set for March 9-10.
In the past, reviews from the BOJ have resulted in changes to policy, including the introduction of the yield curve control program. If an assessment is conducted, one theoretical result is a move away from Kuroda’s ultra-easy policy stance, but it could also end up reaffirming the existing framework.
Kuroda said last week that it’s too early to conduct a review now, following remarks made by fellow board member Naoki Tamura, who called for a review when the time is right. The officials see no contradiction or difference between the two stances, as Tamura also suggested there’s no need to rush into a review.
Read more: BOJ Board Member Calls for Policy Review at the Right Time
BOJ officials are aware of extremely high uncertainties for policy that exist on both the upside and downside. In particular, they are closely monitoring the results of the spring wage talks and the severity of the US economic slowdown next year. The latter could have major impacts on both the global and Japanese economy, according to the people.
Officials don’t see having a review as set in stone. Even if it takes place, it’s hard to predict now whether it will be about next steps after stable price growth comes into view, or a reflection of what went wrong with the goal remaining out of reach, according to the people.
They also see a chance the BOJ will just make adjustments without publicly announcing a review, according to some of the people.
Some officials take the view that it would be natural to conduct the assessment sometime after the 10th anniversary of the start of Kuroda’s massive easing program, according to the people. On the other hand, some others say there’s no rush to conduct a review after the bank had one in March last year.
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