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BoJ Governor Ueda says Japan’s experience highlights the importance of corporate adjustment; after the bubble collapsed, firms curtailed investment and spent many years repaying debt and repairing their balance sheets

Newsquawk Staff ·

  • Even after this adjustment had largely run its course, corporate saving remained high, while overseas investment became increasingly important.
  • Expects rising domestic investment in Japan, but extent is very uncertain.
  • If monetary policy normalisation is achieved, nominal variables will be less of an impediment to official resource allocation.
  • Are in equilibrium with wages growing at level consistent with 2% inflation.
  • 2% inflation hasn't quite become a social norm in Japan yet.
  • Think they are in that equilibrium, but whether they can stay at that equilibrium for a very long time they still don’t know.
  • BoJ may be required to use unconventional tools again, depending on the severity of shocks.
  • Unconventional monetary policy tools have had some positive effects, but they have not been perfect substitutes for rate cuts from positive territory.
  • Rising prices from energy-related products are beginning to hit consumer prices in Japan.
  • If need to deploy unconventional tools again, we should think about ways to minimise negative effects.
  • CPI are now around 3% and expected to rise further into early next year.
  • Underlying inflation will likely stay around 2% but recognise there are some upside risks.
  • Look at the actions of other central banks very, very carefully as they affect asset prices, including exchange rates and interest rates.
  • In general, AI has been a positive demand shock for our economy; will have to look at supply-side factors as well.
  • Japan may do well on AI replacing labour because there are significant labour shortages.
  • Discussing communication by central bank, but don't have a formal commitment yet.
  • Good idea to make what policy framework you are following, and has to be a good balance.
  • With underlying inflation now at 2%, our goal is to keep it there

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