Bank of Japan’s Uchida says hard to see sharp hiking pace after liftoff

A TOP Bank of Japan official said it’s hard to see the bank raising its policy rate continuously and rapidly even after the negative interest rate is ended.

“Even if the Bank were to terminate the negative interest rate policy, it is hard to imagine a path in which it would then keep raising the interest rate rapidly,” BOJ Deputy Governor Shinichi Uchida said on Thursday in a speech to local business leaders in Nara, western Japan.

He noted that after the bank ends the negative rate policy, financial market conditions will remain easy, and he foresees any policy moves thereafter as occurring at a gradual pace.

The yen weakened, while yields on benchmark Japanese bonds erased a small gain as Uchida spoke.

More than half of the economists surveyed by Bloomberg in January predicted an end to negative rates in April.

Some had expected Uchida to use his speech to telegraph fresh signals about the policy path. The veteran policy maker is considered an influential player on the board, as he works closely with Governor Kazuo Ueda.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

A key factor that will determine the policy trajectory will be annual wage negotiations, which have kicked into high gear. Results of those talks are due on March 15, four days before the BOJ’s next policy decision.

Governor Ueda said at a press conference after last month’s stand-pat decision that he’ll continue to assess data carefully to gauge the state of progress toward a virtuous cycle as rippling effects from higher wages spread toward prices.

At that meeting, the bank’s policy board discussed the process for a potential exit, according to the summary of opinions. BLOOMBERG