Tokyo, Oct. 30 (Jiji Press)–Bank of Japan Governor Kazuo Ueda said Friday that the central bank will adjust its monetary policy to stabilize the country’s underlying inflation at 2 pct. Ueda also said that underlying consumer price inflation is “generally consistent” with the BOJ’s 2 pct target. The BOJ chief made these remarks at a press conference following the end of a two-day policy-setting meeting. In its quarterly Outlook for Economic Activity and Prices report adopted at the meeting, the central bank said that underlying inflation has reached a level consistent with the 2 pct target and is expected to remain around the level. Still, Ueda said that the target has yet to be achieved in a sustainable and stable manner, adding that the central bank will assess upside risks to prices and revise its policy at an appropriate time. He also indicated that the BOJ will consider whether to implement an interest rate hike at the next policy-setting meeting in December. The BOJ introduced the inflation target in 2013. After pursuing a massive monetary easing campaign under Ueda’s predecessor, Haruhiko Kuroda, the central bank is currently working to modify its policy. Along with the government’s various efforts, the large-scale monetary easing has had a “powerful stimulus effect on the economy” and has “helped revive a mechanism in which wages and prices rise moderately,” Ueda said. He added that domestic prices were further pushed up by global inflation after the COVID-19 pandemic, as well as labor shortages in Japan. To assess the stabilization of underlying prices, Ueda said that the BOJ will monitor medium- to long-term inflation expectations and wage increases. He also said that stabilizing underlying inflation at around 2 pct will be “more important than ever before,” in order to prevent the economy from being negatively impacted by upside price risks, such as a deterioration in the Middle East situation and the yen’s weakening. “The policy landscape is changing,” he said. Looking ahead, Ueda said that the BOJ will discuss the timing and pace of interest rate hikes after analyzing developments in the Middle East, artificial intelligence-related demand and yen fluctuations. The frequency of rate hikes “is not really something that I can tell you in advance,” he added. At the latest policy-setting meeting, the central bank skipped a rate hike. Ueda said, “We judged that it was necessary to monitor economic and price risks, as well as financial conditions.” END [Copyright The Jiji Press, Ltd.]
