ID :
12997
Sat, 07/19/2008 - 10:08
Auther :
Shortlink :
https://oananews.org//node/12997
The shortlink copeid
BOJ alert to whether higher prices lead to wage hikes
TOKYO, July 19 Kyodo - The current price hikes facing the Japanese economy is not a temporary development, Bank of Japan Governor Masaaki Shirakawa said Friday, suggesting the central bank may raise interest rates if wages follow suit.
The degree to which people actually feel the pinch from price hikes in their daily lives is ''increasing,'' Shirakawa told a seminar in Tokyo.
''While prices have been rising in the long run for foods and other products, we don't think this is a temporary rise.''
How people feel largely affects how companies set the prices of their products,
he also said, adding the BOJ remains highly alert to what he calls a
''second-round effect'' of higher oil and other commodity prices, or ''negative
spiral of (rising) wages and prices.''
He denied Japan has already come to such a stage, because wages have been well
suppressed in the country so far.
But he said, ''We need to avoid'' the second-round effect, suggesting that once
such a situation occurs, the BOJ will not rule out the option of handling it
with monetary policies, possibly by raising interest rates.
Meanwhile, the governor also said the BOJ will not try to control everything
that associate with present rises of energy and raw material costs, because
excessive countermeasures would in turn harm economic growth.
The BOJ maintained its key interest rate at 0.5 percent Tuesday for the 17th
month running, while downgrading its estimate for Japan's economic growth in
the current fiscal year through March and revising upward its projection for
consumer price inflation.
In the seminar, Shirakawa said the bank's monetary policy reflects its view
that the Japanese economy will continue to tread the path of ''sustainable
growth under price stability.''
The key issue for the global economy is whether it can achieve sustainable
growth by shrugging off risk factors, the governor said.
Although there remain risk factors, including price hikes, it is likely that
''advanced economies will gradually exit the current slowdown phase and expand
moderately,'' Shirakawa said.
However, he pointed to some negative factors threatening the desired scenario,
such as rising prices on global commodity markets, downside risks to U.S. and
European growth from troubled financial markets hit by U.S. subprime mortgage
problems and the global credit crunch.
==Kyodo
The degree to which people actually feel the pinch from price hikes in their daily lives is ''increasing,'' Shirakawa told a seminar in Tokyo.
''While prices have been rising in the long run for foods and other products, we don't think this is a temporary rise.''
How people feel largely affects how companies set the prices of their products,
he also said, adding the BOJ remains highly alert to what he calls a
''second-round effect'' of higher oil and other commodity prices, or ''negative
spiral of (rising) wages and prices.''
He denied Japan has already come to such a stage, because wages have been well
suppressed in the country so far.
But he said, ''We need to avoid'' the second-round effect, suggesting that once
such a situation occurs, the BOJ will not rule out the option of handling it
with monetary policies, possibly by raising interest rates.
Meanwhile, the governor also said the BOJ will not try to control everything
that associate with present rises of energy and raw material costs, because
excessive countermeasures would in turn harm economic growth.
The BOJ maintained its key interest rate at 0.5 percent Tuesday for the 17th
month running, while downgrading its estimate for Japan's economic growth in
the current fiscal year through March and revising upward its projection for
consumer price inflation.
In the seminar, Shirakawa said the bank's monetary policy reflects its view
that the Japanese economy will continue to tread the path of ''sustainable
growth under price stability.''
The key issue for the global economy is whether it can achieve sustainable
growth by shrugging off risk factors, the governor said.
Although there remain risk factors, including price hikes, it is likely that
''advanced economies will gradually exit the current slowdown phase and expand
moderately,'' Shirakawa said.
However, he pointed to some negative factors threatening the desired scenario,
such as rising prices on global commodity markets, downside risks to U.S. and
European growth from troubled financial markets hit by U.S. subprime mortgage
problems and the global credit crunch.
==Kyodo
