I want to go right to this question. That was people are raising is the
pressure building on the BMJ to do something with the U.N.
under so much pressure. The government spending so much money to
boost it, use, you say, and others, there won't be any change.
Why not? Why can't what does get credit at some
point to do something? Well, the first of all, the inflation
rate is comparatively very low to the US and
Europe. So headline is 3 percent and excluding
fresh foods 3 percent and excluding energy and fresh food.
It's one point eight percent. So still below the 2 percent inflation
target. It may go up a little bit from here
about the next year. It's projected to go down as oil prices
and gas prices will be plateaued for for a year.
Then it contribution to the inflation rate will go down.
So, you know, there is no reason to hike the interest rate.
And still also the GDP is still very weak and there is a large GDP gap.
So from monetary policy textbook, you shouldn't raise the interest rate.
Now, you do think I think is so important, you think they could tweak
yield curve, control the ceiling on the 10 year JCB, what could they do and why
would they do that now? How can they?
So you've got to control is putting a ceiling on the 10 year bond rate and
that can be adjusted if necessary or if it is seen as appropriate.
The reason is that while it's 10 year bond rate.
So are you do you think that low interest rates
will continue for 10 years? Probably not.
Maybe, you know, this 2 percent inflation targeting will kick in.
Maybe not. If not next year, next next year and so
on. If the government stimulus works, then
you could make our sort of a hypothesis or the theory that, yes, in
10 years we are confident that the economy will be back.
And you can raise the 10 year bond rate and also having a steeper yield curve is
good for the commercial banks. So that should be welcomed by the
commercial banks. Some breaking news.
Prime Minister Kouchner announcing a twenty one twenty nine trillion yen
extra budget for stimulus and the total size of the economic stimulus
at seventy one point six trillion. Speaking of the government, there's a
lot of conjecture right now about how the when Kuroda steps down in April,
that maybe that's when the governor will say not that we can exit this ultra
dovish policy pressure on the yen and start on a more less dovish past, not
exactly hawkish, but getting in that direction.
Do you think that's what the government wants to do?
Well, it's kind of a self-defeating policy, right, because raising the
interest rate means that it will be bad for the economy and also bad for the
those laws deficit and large, large debt.
So it should be combined with the more restraint on on the spending.
Otherwise, it's going to be a really large impact on on on the economy.
And also, if you don't like the depreciation, then the intervention is
the answer, which they did in September the second and again last week.
So targeting the exchange rate is not in
the mandate of the BOJ. But the intervention has proved to be
not exactly long lasting. Right.
If that is the strategy to intervene, to try and keep a levels on the yen
somewhat stable, they obviously just don't want it to get to 160 170 very
quickly, hoping that the market tide return.
Is that a sustainable strategy? I think we've got to have a retake of
that, we're having a little bit of difficulty.
The intervention, Heidi, was just asking about how to the extent they have to do
it, what what that means then for big policy and how what's going on
complicates things for the government. Well, the there's no conflict between
the views of policy, that dovish policy and the intervention.
There are two targets. The exchange rate and the inflation and
intervention is targeted to the exchange rate and monetary policy is targeted to
the inflation. So that can be done.
Policy assignment to the two targets, two instruments.
Oh, OK. I want to actually continue on on this
line of of where we're going next, but particularly on this question of why
Sisi, what will they say if they are changing it?
What do we expect to see in the policy statement?
What do we expect to hear? Corona asked.
Right now, the range is plus zero point to five to minus four point two.
What kind of what kind of shift could they make?
How much of a how big of a step would they make?
And again, what will he say? How will he explain it
in this meeting? I expect there.
There is no change. But going forward, if the inflation rate
is high, it becomes higher. And if the wage becomes higher, then
there is a basis to argue that in the long run, maybe we can start raising the
allow higher long term interest rate.
So it depends on the data. And
but I think the the order of change will be by city and policy rate and Kutty.
But not today. You're saying not today.
Not today.