“In times like now, when uncertainty is high, central banks must conduct monetary policy by extensively examining various data without any pre-set ideas.“, said the governor of the Bank of Japan (BoJ), Haruhiko Kuroda, during the early hours of Friday in Asia.
Additional comments
The Japanese economy continues to recover as a trend.
The BoJ must continue to support the recovery of the economy with powerful monetary easing.
The Expected rise in inflation is mostly driven by energy costswhich lack sustainability.
We see no signs of a sharp increase in medium- and long-term inflation expectations in Japan.
We will try to reach an inflation of 2% in a sustainable and stable way, creating a cycle in which the increase in wages boosts the real income of households.
The coronavirus pandemic continues to put downward pressure on the economy.
The recent rise in commodity prices is hurting the economy by lowering real income.
The inflation situation in Japan is completely different from that of the United States and Europe.
Uncertainty about the economic outlook is rising sharply.
There is a risk that the crisis in Ukraine will further affect the world economy and cause strong volatility in commodity prices.
There is a risk that markets, including currency, could destabilize as advanced economies accelerate the withdrawal of stimulus.
Keep in mind that strong currency volatility would hurt the economy. The Bank of Japan will closely monitor the impact of market volatility on the economy and prices.
Short-term inflation expectations of households, businesses and market participants are clearly rising.
We are watching closely whether this increase in short-term inflation expectations will spill over into medium- and long-term inflation expectations and wage growth.
We must see both prices and wages rise.
Japan must see a situation in which price increases are accompanied by increases in real wages and income.
It is appropriate to maintain the BoJ’s current forward orientation.
The Covid-19 pandemic remains the main risk that could harm the Japanese economy
Source: Fx Street
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