BOJ chief Ueda sees 'some upside risks' to inflation
TLT•Bank of Japan Governor Kazuo Ueda said underlying inflation is expected to stay around the 2% target, but the central bank sees some upside risks. Energy-related price increases are beginning to affect consumer inflation, which Ueda said could accelerate further into early next year.
1. Inflation outlook
Ueda said the rise in energy-related prices was beginning to affect consumer inflation, with price growth seen accelerating further into early next year. He said wages were growing at a level consistent with 2% inflation, but that the target had yet to become a social norm in Japan.
2. Policy considerations
Ueda said the BOJ was watching other central banks’ actions carefully because they affect asset prices, including foreign exchange and interest rates. He said unconventional policy tools had had some positive effects but were not perfect substitutes for cutting rates from positive territory, and the BOJ may use them again depending on the severity of an economic shock.
