BOJ chief Ueda sees 'some upside risks' to inflation
EWJ•Bank of Japan Governor Kazuo Ueda said the central bank expects underlying inflation to stay around its 2% target but sees some upside risks. Energy-related price increases were beginning to affect consumer inflation, with price growth expected to accelerate further into early next year.
1. Inflation outlook
Ueda said underlying inflation was expected to stay around the BOJ’s 2% target, while the central bank recognized “some upside risks.” Energy-related price increases were beginning to affect consumer inflation, which he said was seen accelerating further into early next year.
2. Policy considerations
Ueda said wages were growing at a level consistent with 2% inflation, but the target had yet to become a social norm in Japan. He said the BOJ was watching other central banks’ actions carefully because they affect asset prices, foreign exchange rates and interest rates.
3. Unconventional tools
Ueda said unconventional monetary tools had had some positive effects when used by the BOJ but were not perfect substitutes for interest-rate cuts from positive territory. The bank may use them again depending on the severity of an economic shock, while considering ways to limit negative effects, including on market functioning.
