Japanese Prime Minister Fumio Kishida said on Sunday his government and the central bank must discuss their relationship in guiding economic policy after he names a new Bank of Japan (BOJ) governor in April, reported Reuters.
The news also adds that the remark heightens the chance the government may revise its a decade-long blueprint with the central bank that focuses on beating deflation, a move that would lay the groundwork for an exit from the BOJ's ultra-loose monetary policy.
"The government and the BOJ must work closely together, but also each play its own role" in achieving price stability and higher wage growth, Kishida said in a program on public broadcaster NHK.
Additional comments
Under the new BOJ governor, we must discuss the relationship between the government and the BOJ.
In guiding monetary policy, policymakers must have a view on the outlook for the economy. There needs to be careful communication and dialogue with markets.
While communicating closely with markets, the BOJ needs to make its policy more flexible with an eye on an eventual normalization of monetary policy.
Market implications
USD/JPY reacts to the diplomatic comments by extending Friday’s pullback from a three-week high, depressed around 132.00 by the press time.
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