If the Bank of Japan sees that it can achieve its price target, it might need to normalize monetary policy, Kazuo Ueda said on Monday
Japan’s new central bank governor Kazuo Ueda said he wants more time to judge whether wage growth will be sustained enough to keep inflation stably at the bank’s 2 per cent target, suggesting he will be in no rush to dial back its massive stimulus.
If the BOJ sees that it can achieve its price target, it might need to normalize monetary policy, he said. “If not, we may need to come up with a more sustainable framework with an eye on the side-effects of monetary easing.”, succeeding Haruhiko Kuroda, whose second, five-year term ended on Saturday.
But with inflation exceeding the target, many analysts expect the BOJ to tweak or end YCC, a policy combining a 0.1 per cent target for short-term interest rate and a 0 per cent cap for the 10-year bond yield, as soon as this quarter. “The outcome of this year’s spring wage negotiations is welcome. But it’s necessary to scrutinize whether this move will be sustained,” Ueda said.
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