BOJ chief Ueda keeps upbeat view on inflation, wage outlook
BANK of Japan (BOJ) governor Kazuo Ueda said the country’s inflation was accelerating as a trend as a tight labour market pushes up wages, reiterating the bank’s conviction that conditions for ending negative interest rates were falling into place.
Speaking in parliament, Ueda said Japan’s economy is likely to experience a positive cycle, in which higher job and wage growth leads to moderate rises in inflation.
“Service prices continue to rise moderately,” he said on Thursday (Feb 22). “Trend inflation is also gradually accelerating. We will guide monetary policy appropriately in line with such moves.”
Ueda declined to comment on the yen’s recent levels, saying only that currency moves are influenced by various factors.
“It’s important for currency rates to move stably reflecting fundamentals,” he said.
Sources have told Reuters the BOJ is on track to end negative interest rates in coming months despite Japan’s economy slipping into a recession, on growing signs that companies will continue to offer bumper pay amid a tightening job market.
A Reuters poll showed more than 80 per cent of economists expect the BOJ to pull short-term interest rates out of negative territory in April.
Expectations that Japan’s borrowing costs will remain very low, however, have pushed down the yen to around 150 against the US dollar, a level seen by markets as heightening the chance of yen-buying intervention by Japanese authorities. The US dollar stood at 150.27 yen on Thursday. REUTERS
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