BoJ’s Kuroda: Raising interest rates now is not desirable

Bank of Japan (BoJ) Governor Haruhiko Kuroda said on Friday, “raising interest rates now is not desirable.”

Additional comments

It is true that the CPI data shows significant price increases.

If Japan’s labor productivity rate is estimated to be around 1%, wages must rise by about 3% for inflation to reach our 2% target in a sustained and stable manner.

I am not saying that the BoJ cannot raise interest rates indefinitely; rather, i am saying that raising rates now would be inappropriate in light of current economic and price conditions.

The new capitalism policy will not have an immediate impact on BoJ.

It will be difficult to meet the 2% target unless nominal wage growth is robust.

If the price target is reached, the BoJ may normalize monetary policy, raising the cost of financing government debt.

Government steps to boost Japan's potential growth will help maximise the effect of monetary easing.