Bank of Japan Governor Kazuo Ueda said Wednesday the central bank needs to pay more attention to the risk of missing its 2% inflation target with premature monetary tightening, rather than lagging the curve in fighting the steep rise of prices.
While other countries are experiencing high inflation, the situation is “quite different” in Japan, Ueda said at a briefing in Japan as G7 chairman, alongside Finance Minister Shunichi Suzuki.
“I don’t deny the possibility,” Ueda said when asked by a reporter whether Japan could risk falling behind the curve in dealing with the risk of very high inflation by maintaining extremely loose monetary policy for an extended period.
“But the Bank of Japan should pay more attention to (the risk of) failing to reach 2% inflation” with the premature end of the accommodative policy, and not with the delay in raising interest rates, Ueda said, which is in Washington at their first international meeting since taking office Sunday.
Ueda is said to have explained to his colleagues at the G7 meeting that the Japanese central bank will continue its monetary easing until the 2% inflation target is met in a stable and sustainable manner.
Japan remains an exception in a global wave of central banks tightening monetary policy to combat rising prices, as Japan’s central bank focuses on supporting a fragile economy until lasting increases in interest rate emerge. inflation and wages.
Markets, however, are abuzz with speculation that the Bank of Japan will scrap or end its controversial bond yield control policy under Ueda, given the mounting knock-on effects of prolonged easing, such as the impact on profits from banks.
Source: Terra
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