BOJ Policy Maker Highlights The Benefits Of A Weak Yen To Japan’s Economy
Asahi Noguchi, the central bank policymaker, said that the benefits of a weak yen overshadow the shortcomings of Japan’s export-oriented economy, dismissing the currency’s recent decline that might hurt the economy by increasing import costs.
Noguchi said that, unlike other countries worried about rising inflation, Japan’s main goal is to remove deflation and focus on inflation to more desirable levels.
He further added that a weak yen is more constructive for achieving this goal than a strong yen, which would push down prices and hurt exports.
Noguchi told a news conference that it’s true that some sectors might suffer from a weak yen. But if we look at it as a whole, the merits of a weak yen compensate for the demerits.
The remarks echo those of Bank of Japan Governor Haruhiko Kuroda, who has constantly addressed the positives of a weak yen. One such example is the boost it gives to Japanese firms’ overseas profits.
Though it boosts exports, it has become a headache for Japanese policymakers as it blows up the cost of fuel and raw material imports, which are already rising due to the war in Ukraine.
Few analysts and lawmakers have blamed the BOJ’s ultra-low interest rate policy for stimulating unwelcome yen declines.
Noguchi said Japan’s primary consumer inflation might outdo the central bank’s 2% target from April on increasing energy costs and the disappearing effect of past cell phone fee cuts.
He added that with the rising external factors rather than a recovery in domestic demand, the BOJ must keep monetary policy ultra-loose to sustain the economy.
Before the news conference, Noguchi said that Japan is not experiencing the rising inflation seen in many other countries. Furthermore, a country still hindered by a sticky deflationary mindset will take substantial time to stably attain its 2% inflation target and validate a withdrawal of stimulus.
Japan has not been exempted from increasing fuel and commodities prices, with wholesale inflation hitting record highs. As a result, analysts expect consumer inflation to hit or exceed the BOJ’s 2% inflation target by this month.
On Thursday, a central bank survey showed that the ratio of Japanese households expecting prices to rise a year from now had hit a 14-year high as inflationary pressures from growing raw material costs grew.