Bank of Japan Governor Kazuo Ueda has retained an upbeat outlook, saying he expects that domestic wages will keep rising because the global economy should warm up after a short slowdown.
Ueda said the central bank’s monetary policy will stay ultra-loose because inflation is now about 3%, but expected to drop below its 2% target toward the latter half of this fiscal year.
“The BOJ’s forecasts already take into account the chance of a global economic slowdown. But they don’t see a severe global recession as a baseline projection,” Ueda told a news conference on Thursday after attending the Group of 20 (G20) finance leaders’ meeting in Washington.
“As our base scenario is for global growth to pick up after a period of slowdown, Japan’s wages will likely keep rising,” he said.
IMF trims global outlook
Ueda’s remarks came after the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, and warned that a severe flare-up of financial system turmoil could slash output to near recessionary levels.
Ueda said his debut international meeting was fruitful and gave him the chance to meet with many overseas counterparts, adding that deepening personal trust with them was crucial to engage in frank discussions on global economic issues.
Ueda took office on Sunday, succeeding Haruhiko Kuroda who deployed massive monetary stimulus during his decade-long helm that is now drawing criticism for distorting bond markets and straining financial institutions’ profit.
While markets have been rife with speculation he will soon phase out Kuroda’s stimulus, Ueda has consistently stressed the need to maintain ultra-loose policy until a more durable rise in wages and inflation can be foreseen.
Markets are focusing on the BOJ’s first policy meeting chaired by Ueda to be held on April 27-28, when the board will produce fresh quarterly growth and inflation forecasts extending through fiscal 2025.
“It’s been just a week since I took office and now I am on a business trip. I’ll think about it closely once I’m back,” Ueda said, when asked about prospects for the April policy meeting.
- Reuters with additional editing by Jim Pollard