Bank of Japan expects consumption to improve on solid wage gains: Governor Ueda

[TOKYO] Bank of Japan Governor Kazuo Ueda said on Thursday he expects consumption to improve, as rises in import costs moderate and wage growth strengthens.

When inflation started to accelerate in 2022, wage gains lagged the increase in import costs, which kept real wages and consumption lacklustre, Ueda told parliament.

“From now onward, we will likely see import cost-driven inflation moderate. Wages, on the other hand, continue to rise steadily,” he said. “As such, we expect real wages and consumption to improve ahead,” Ueda added.

On the size of the BOJ’s balance sheet, Ueda said the central bank hopes to spend time scrutinising how much it should eventually reduce its balance sheet, taking into account the examples of other central banks.

“The size of the BOJ’s monetary base, balance sheet and current account balance is somewhat too big, which is why we are reducing the scale of our bond buying,” Ueda said. REUTERS