Press Conference by Prime Minister Kishida on the Bank of Japan Terminating Its Negative Interest Rate Policy

[Provisional translation]

I have just finished meeting with Governor Ueda of the Bank of Japan. During that meeting, I was briefed on today’s Monetary Policy Meeting. Governor Ueda explained that, having confirmed a virtuous cycle of prices and wages, the Bank has judged that conditions have reached a point where it can be anticipated that the Bank’s two percent price stability target will be attained sustainably and stably. Accordingly, with the monetary easing policy of a “different dimension” that has been in place until now judged to have fulfilled its role, the Bank has undertaken a change in monetary policy that includes the termination of its negative interest rate policy. 

Last week, the first set of results of the annual spring wage bargaining negotiations indicated that wages will be raised by 5.28 percent, surpassing last year’s wage increases and marking the first time in 33 years in which that figure was more than five percent. Whether it be [annual domestic] investment at a scale of 100 trillion yen, our highest level ever, or it be corporate earnings increasing for four consecutive quarters, since I assumed office as prime minister, we can now see positive movement in wage hikes, investment, and corporations’ earning capacity, areas where I have placed particular priority. 

In light of this situation, as for the monetary easing policy of a "different dimension" that has been underway for over a decade, from the perspective of stepping towards a new stage based on current circumstances while simultaneously further ensuring forward-looking economic developments, the Government views as appropriate the fact that an accommodative monetary environment will be maintained. Based on that, the Government and the Bank of Japan must continue to act in close cooperation. Governor Ueda and I confirmed that we will engage in flexible policy management in response to economic and price trends. 

The Government intends to mobilize all possible means to wrest ourselves completely away from deflation and transition to a new kind of growth-oriented economy. I will conclude my opening statement here. 

(On whether the Government and the Bank of Japan will revise their accord, and on whether or not a declaration of Japan exiting deflation will be issued) 

First of all, with regard to the accord, in 2013, a joint statement was issued. Consistent with this joint statement, the Government has also made all-out efforts to break free of deflation. And, we recognize that, through a combination of various measures under a New Form of Capitalism, results are now emerging. As I just stated, given these positive economic developments, as for the monetary easing policy of a "different dimension" that has been in place for over a decade, from the perspective of stepping towards a new stage in light of current circumstances while simultaneously further ensuring forward-looking economic developments, the Government considers appropriate the fact that an accommodative monetary environment will be maintained. At the present time, we are not considering revising this accord. 

As for your other question, regarding a declaration that we have broken free of deflation, extricating ourselves from deflation involves comprehensively judging the fundamental tenor of prices and the background to those prices. We consider it something to be judged comprehensively from a wide range of angles, including indicators such as consumer prices and the GDP gap, wage increases, trends in firms’ ability to pass price hikes through to clients, and the spread of price increases. Consequently, while the Bank of Japan set forth its conclusions today, I believe that a declaration that we have broken free from deflation would require a comprehensive assessment to be made of the type I just explained.  

(On whether or not Prime Minister Kishida and Bank of Japan Governor Ueda discussed foreign exchange during their meeting, in light of the depreciation of the yen occurring as a result of the negative interest rate policy being lifted)  

As for whether or not we conferred about foreign exchange during our meeting, we did not have any particularly noteworthy discussion of foreign exchange.