Bank of Japan Governor Ueda Kazuo (植田和男) reaffirmed that underlying inflation is becoming entrenched at 2% and indicated a policy of also clarifying the policy framework externally. He made the remarks at an IMF-hosted event and also referred to price trends through early next year.
Bank of Japan Governor Ueda Kazuo (植田和男) said that, given the current situation in which underlying inflation has reached 2%, the goal is to maintain that level. The remarks were made at an event hosted by the IMF.
Governor Ueda pointed to the importance of striking a balance when communicating policy priorities and said that it would be desirable to present the monetary policy framework externally. This is interpreted as indicating that the Bank of Japan is emphasizing the clarification of its policy framework.
While stating that underlying inflation is expected to remain around 2%, he recognized that some "upside risks" exist. He indicated that rising energy-related commodity prices are filtering through to consumer prices and that price growth could accelerate by early next year.
He said that wages are in an equilibrium state, rising at a level consistent with 2% inflation, but also pointed out that 2% inflation has not become established as a norm in Japanese society. He explained that the challenge is to entrench underlying inflation near the target.
The Bank of Japan is said to be maintaining its stance of continuing to raise interest rates to entrench underlying prices at 2%. Market attention is focused on the timing of additional rate hikes from the next meeting onward and their impact on the yen exchange rate.