The Bank of Japan can make a smooth exit from monetary easing once sustainable 2% inflation is achieved, but it needs to keep policy loose for now, Deputy Gov. Ryozo Himino said Wednesday.
“The Bank of Japan should carefully monitor the evolution of wages and prices, judge the timing of the exit and design its process,” Himino said.
“If this is done properly, there would be a sufficient possibility of achieving a positive outcome from the exit, since a wide range of households and firms would benefit from the virtuous cycle between wages and prices,” he said.
The banking sector has the resilience to withstand monetary tightening, while appropriate risk management will be needed, he said.