Osaka
Bank of Japan (BOJ) Governor Kazuo Ueda has expressed concerns about the uncertainty surrounding whether companies will continue raising prices and wages, highlighting the bank’s commitment to maintaining an ultra-loose monetary policy.
Ueda emphasized that the key to the monetary policy outlook is whether strong wage growth and consumption become the primary drivers of inflation, rather than cost pressures from rising import costs.
Under its current yield curve control (YCC) policy, the BOJ guides short-term interest rates at -0.1% and caps the 10-year government bond yield around zero. Ueda mentioned that the BOJ could make adjustments to YCC when the stable, sustained achievement of its 2% inflation target becomes more apparent. However, he noted that the BOJ does not have a clear plan in mind yet for when and how to abandon the yield cap or raise short-term interest rates, and such decisions would be based on comprehensive assessments of various factors.
Ueda’s comments come after the BOJ’s recent decision to maintain ultra-low interest rates and its pledge to continue supporting the economy until inflation sustainably reaches its target. He expressed caution regarding the acceleration of wage hikes, as many companies remain undecided on their wage strategies for the upcoming year. Additionally, Ueda mentioned that the BOJ is closely monitoring the impact of the yen’s recent depreciation on economic and price developments.
Overall, the BOJ remains committed to its accommodative monetary policy, focusing on supporting demand and the broader economy while carefully assessing the evolving economic landscape.
