Bank of Japan’s top priority will be to maintain its “powerful” monetary stimulus, BoJ governor Haruhiko Kuroda said on Monday.
“Japan is absolutely not in a situation that warrants monetary tightening, as the economy is still in the midst of recovering from the pandemic’s impact,” Kuroda said in a speech.
Unlike its US and European counterparts, the BoJ does not face a trade-off between the need to tame inflation and support the economy, as Japan’s inflation remains modest and driven by temporary factors like rising raw material costs, Kuroda said.
Japan‘s consumer inflation must achieve 2% on average, not in a temporary way driven by cost-push factors such as surging fuel and raw material costs, Kuroda said.
“For inflation to stably accelerate toward 2%, wage and price growth must mutually rise in a positive cycle,” he said.
“The BoJ will be unwavering in its stance of maintaining powerful monetary easing, so that recent changes such as a rise in inflation expectations … lead to sustainable price growth,” he said.
- Reuters with additional editing by Jim Pollard
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