Head of BOJ promises to provide economic support through monetary stimulus, assures Reuters

Head of BOJ promises to provide economic support through monetary stimulus, assures Reuters

Bank of Japan Governor Kazuo Ueda stated during a press conference that the central bank will continue to support the economy by maintaining accommodative monetary conditions for the time being. He mentioned that Japan’s medium- and long-term inflation expectations are still moving towards 2%. The BOJ recently ended eight years of negative interest rates and other unconventional policies, marking a significant shift away from massive monetary stimulus aimed at reviving the economy and combating deflation.

During his appearance in parliament, Ueda was questioned about the timing of the decision and its potential impact on Japan’s fragile economic recovery. He explained that waiting for inflation to reach 2% before making changes could have introduced sharp upside risks. Ueda highlighted the importance of avoiding a sudden need for interest rate hikes that could disrupt the economy. He also mentioned that while cost-push pressures on inflation were easing, service-related prices were gradually increasing.

Ueda discussed the positive signs from recent wage negotiations between major firms and unions, as well as feedback from companies gathered by the BOJ. The data indicated a positive cycle of rising wages and inflation in Japan. Overall, Ueda emphasized the importance of balancing economic stability with the need for gradual monetary policy adjustments to support sustainable growth.

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