Bank of Japan official: Yen swings too fast and one-sided

Deputy head of the Bank of Japan Masazumi Wakatabe gave an opinion that the recent swings of the national currency were one-sided and quite fast. This indicates vague fears of possible harm from the fall of the national currency against the dollar to a 32-year minimum.

This opinion was expressed during the seminar on the annual meeting of INF and world Band in Washington. Also, Wakanabe said that the loose policy of the bank and the government's efforts to restrain the fall of the yen is moving in the same direction.

According to him, the prime minister supports this policy to deal with inflation. It was an answer to a question from journalists about how the government's efforts to restrain the fall of the yen and extremely low credit rates are interconnected.  

Wakatabe also indicated the prime minister's recent statement in the Financial Times that monetary policy should stay loose until salaries rise. Regarding the recent sharp fall in the yen, Wakatabe said the currency swings are too fast and one-sided at the moment.

By law, the Ministry of Finance of Japan, and not the Central Bank, decides on the exchange rate.

Wakatabe noted that the Central Bank should maintain loose monetary policy, because salaries are practically not growing, and inflation growth hasn’t yet been fixed at the target level of 2%. He said that when a stable inflation rate of 2% is reached, the bank will consider changing the policy.

In August, the level of core consumer inflation in the country increased to 2.8%. It exceeds the central bank's target of 2% for the fifth month in a row. All this is happening on the weakening of the national currency and pressure from commodities.

The head of the Bank, Haruhiko Kuroda, spoke at a separate seminar on Saturday and said that the inflation rate will probably be below 2% in the next financial year. He also said that monetary policy should stay extremely loose.