Japan Business Leader Urges Swift Normalization of Monetary Policy

03 Jan, 2024

Masakazu Tokura, head of Japan's influential business lobby, Keidanren, emphasized the urgency of normalizing the Bank of Japan's (BOJ) monetary policy.

During the first day of the BOJ's policy-setting meeting, Tokura urged the central bank to abandon its long-standing stimulus policy, including negative interest rates, in the "not so distant future."

In contrast to the stabilized inflation and real interest rates in the United States, Tokura highlighted concerns about Japan's real interest rates potentially entering negative territory. This has fueled speculation that the BOJ might shift away from its more than a decade-long policy of monetary easing. However, Tokura acknowledged uncertainty regarding the timing of such a policy change.

While recognizing the BOJ's cautious approach in addressing deflation, Tokura stressed the importance of aligning interest rate policies with economic fundamentals. He expressed the business community's commitment to sustaining wage hikes and structural improvements, aiming to raise base salaries in the coming year.

Tokura concluded by emphasizing the market's preference for interest rate policies that align with economic fundamentals, avoiding potential harm to the economy. The call for timely monetary policy normalization reflects the ongoing discussions surrounding Japan's economic strategy and potential shifts in central bank measures.

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