Bank of Japan Deputy Governor Ryozo Himino said on Thursday that the central bank would raise interest rates if the economy and prices move in line with expectations.
In addition, the Deputy Governor of the Bank of Japan made the following statements:
Japan still has a way to go before entering the realm of positive real interest rates. The Bank of Japan continues to support the economy with an accommodative monetary environment. It may be necessary to maintain real rates in negative territory if the Japanese economy faces a shock or deflationary factors. If shocks and deflationary factors disappear, it would not be normal for real rates to remain clearly negative for an extended period. The level of the neutral real interest rate for the economy is affected by various factors, not just demographics. The ideal scenario for Japan would be economic growth that boosts wages and corporate profits, leading to moderate inflation. There are questions about why the estimated output gap has not improved significantly despite real interest rates remaining clearly negative.
