BOJ's Kuroda pledges to maintain 'extremely' accommodative policy

[TOKYO] Bank of Japan (BOJ) Governor Haruhiko Kuroda pledged on Friday (Jan 21) to continue an "extremely accommodative" monetary policy for the time being, unlike its counterparts in the United States and Europe, due to modest price growth.

"We're not afraid of inflation because inflation (in Japan) is so low," Kuroda said in an online seminar hosted by the World Economic Forum. "We will continue our expansionary monetary policy unlike other G7 countries," he said.

Kuroda said the Japanese economy might come under "strong downward pressure" due to a spike in cases of the highly transmissible Omicron variant of the coronavirus, adding an increase in demand in Japan has lagged other countries.

But he said the BOJ was "watching closely" for signs of change in companies' price-setting behaviour, pointing to a recent growing number of firms passing on higher costs to consumers.

Kuroda said the government's massive spending package to combat the Covid-19 pandemic helped reinvigorate the economy.

"But inflation is still below 2 per cent. Unlike in the United States and Europe, we have to continue extremely accommodative, easy monetary policy for the time being."

REUTERS