The Bank of Japan will end its yield curve management (YCC) program and begin shrinking its balance sheet when it is more confident that inflation is more likely to stabilize at its 2% target. It has been reported “Hitting the Primer” Referring to the statement of Kazuo Ueda, Governor of the Bank of Japan.
“Once we can predict that inflation will stabilize at the 2% target level, we will leave the YCC and move on to shrinking our balance sheet,” Ueda said in a speech in parliament.
As part of its yield curve management program, the Japanese central bank has set a target value of -0.1% for the short-term rate. In addition, the value is determined for the yield on 10-year government bonds – almost zero.
Ueda drew attention to the existence of uncertainties affecting the inflation outlook. In particular, it is not known whether the increase in wages will continue and whether it will affect the employees of small companies.
Previously, a number of major Japanese companies had offered the biggest pay raises in decades. Toyota in particular did this in February.
Inflation in Japan in January reached 4.3%, a record since 1981.
May 9 Kyodo News reported About a 2.9% drop in real wages in Japan in March 2023 compared to March 2022.