Bank of Japan Governor Kazuo Ueda said the bank expects underlying inflation to stay around its 2% target, while acknowledging upside risks. He added that rising energy-related prices are starting to reach consumers and that the BOJ is watching other central banks closely.
Bank of Japan Governor Kazuo Ueda said on Friday the bank expects underlying inflation to stay around its 2% target, but sees some upside risks.
Ueda said higher prices for energy-related products were beginning to hit consumer inflation, with price growth seen accelerating further into early next year.
Wages and the 2% goal
Speaking at an International Monetary Fund seminar, Ueda described the wage picture. According to Reuters: "We are in an equilibrium with wages growing at a level consistent with 2% inflation."
Still, the 2% inflation has yet to become a social norm in Japan, Ueda said. The BOJ's goal now is to anchor underlying inflation around its target.
Watching other central banks
Ueda said the BOJ was looking at the actions of other central banks very carefully, because those actions affect asset prices including foreign exchange rates and interest rates.
On unconventional policy tools, he said they had some positive effects when the BOJ deployed them, but have not been perfect substitutes for cutting interest rates from positive territory.
The BOJ may be obliged to use such tools again, depending on the severity of any economic shock that may hit Japan. If it does, Ueda said, the bank should think about ways to minimize negative effects, including possibly the effect on the functioning of the market.
Source: Reuters via Investing.com
Trading involves risk.
Risk Disclaimer
