TOKYO (Reuters) – Japanese Prime Minister Shinzo Abe said that the impact of the Bank of Japan’s monetary policy is gradually spreading to the real economy and that the nation was on its way to escaping deflation.
Downside risks to the global economic outlook are rising, Abe also said in a video message aired on Wednesday at a seminar in Tokyo organised by Bank of America Merrill Lynch.
As Japan struggles to meet its 2% inflation target, the BOJ is planning to make its controversial negative interest rate policy the centrepiece of future monetary easing, the Nikkei business daily reported on Wednesday.
By shifting its focus to negative rates, the BOJ will have more options to draw on in case an expected U.S. interest rate hike comes later than foreseen – strengthening the yen.
But analysts doubt whether deepening negative rates next week would ensure a lasting weakening of the yen.
(Reporting by Takaya Yamaguchi; Writing by Kaori Kaneko; Editing by Chang-Ran Kim)