![]() "Whether we keep short-term rates at zero or move them to 0.1 per cent, and at what speed we will push up rates to 0.25 per cent or 0.50 per cent, would depend on economic and financial conditions at the time," Ueda said on the rate path. ![]() ![]() With inflation exceeding the BOJ's 2 per cent target for well over a year, many market players expect the bank to phase out its massive stimulus next year with some betting on a move in January. The BOJ currently applies a 0.1 per cent charge on a small pool of reserves under its negative interest rate policy, which was put in place in 2016 to keep borrowing costs ultra-low. The remarks came in the wake of those by Deputy Governor Ryozo Himino on Wednesday elaborating on the potential impact an exit from ultra-loose monetary policy could have on the economy. But we have not made a decision yet on which interest rate to target once we end our negative interest rate policy," he told parliament. "We could either keep the interest rate applied to reserves (financial institutions park with the central bank), or revert to a policy targeting the overnight call rate," Ueda said. He also said the central bank has several options on which interest rates to target once it pulls short-term borrowing costs out of negative territory. Prior to the meeting, Ueda told parliament the BOJ will face an "even more challenging" situation in the year-end and the start of next year, when asked by a lawmaker about the economy and monetary policy guidance. "I explained that the BOJ hopes to check whether wages will rise sustainably including next year, whether higher wages will push up service prices, and the strength of domestic demand," Ueda told reporters after the meeting with Kishida, when asked whether he spoke about the BOJ's exit strategy. While the meeting was a regular exchange of views held about once every quarter, it comes at a time of heightening market expectations that the BOJ will soon embark on an exit from decades of ultra-low interest rates. TOKYO :Bank of Japan Governor Kazuo Ueda said on Thursday he told Prime Minister Fumio Kishida the central bank will scrutinise the strength of domestic demand and next year's wage outlook in guiding monetary policy.
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