Koroda the central bank’s main goal is to support the economy by maintaining monetary stimulus

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Koroda the central bank's
  • Japan not in situation that warrants monetary tightening
  • Households becoming more accepting of price rises – Kuroda
  • Wage growth holds key to whether inflation becomes sustainable
  • As long as moves stable, weak yen benefits economy – Kuroda

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank’s top priority was to support the economy by maintaining its “powerful” monetary stimulus.

Koroda the central bank's

Koroda the central bank’s: Unlike its American and European counterparts, Kuroda said the BOJ does not trade the need to curb inflation and support the economy because Japan’s inflation is low and is driven by temporary factors such as rising raw material costs.

Japan is absolutely not in a situation that warrants monetary tightening, as the economy is still in the midst of recovering from the pandemic’s impact,” Kuroda said in a speech.

“Since the Russian invasion of Ukraine, the cost of raw materials in this war has increased. And Japanese families are accepting higher prices, calling it a ‘significant change’ in terms of achieving the BOJ price target,” Koroda said.

But Japan’s consumer inflation must achieve 2% on average, not in a temporary way driven by cost-push factors, Kuroda said.

Koroda the central bank’s

“For inflation to stably accelerate toward 2%, wage and price growth must mutually rise in a positive cycle,” he said.

“The BOJ will be unwavering in its stance of maintaining powerful monetary easing, so that recent changes such as a rise in inflation expectations … lead to sustainable price growth,” he said.

On recent yen moves, Kuroda repeated his view that currency rates should move stably reflecting economic fundamentals.

While the yen’s decline hurts households and retailers by boosting import costs, it helps regional areas by attracting overseas tourists as Japan re-opens its borders, Kuroda said.

“As long as the moves are stable and not very sharp, a weak yen in general is likely to have a positive impact on Japan’s economy,” Kuroda said.

Japan’s core consumer prices in April rose 2.1% from a year earlier, exceeding the BOJ’s 2% target for the first time in seven years, due largely to rising fuel and food costs.

BOJ officials have repeatedly stressed that such cost-push inflation will prove temporary and won’t prompt the central bank into tightening monetary policy.

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