BOJ Chief Hints At Cutting Stimulus Before Meeting 2% Inflation Goal

Bank of Japan Governor Kazuo Ueda indicated recently that the central bank may scale back its monetary easing toward an eventual exit, even when the inflation rate is below its 2% target, noting that its "sustainable and stable" rise is important, Kyodo News reported.

Photo Insert: Bank of Japan Governor Kazuo UedaUeda and Prime Minister Fumio Kishida

While the BOJ's policy guidance now explicitly mentions the need for pay hikes in achieving its inflation target, Ueda said in an interview with Kyodo News and other media outlets that wage growth is not the central bank's target in and of itself.

"Even if the inflation rate is around there (below 2 percent), what is more important is to see whether it is sustainable and stable" than the numbers in the first decimal place, Ueda added.

The Japanese central bank will check various data, including wages, inflation expectations and the output gap to gauge Japan's trend inflation. Based on the BOJ's most recent projections, core consumer prices, excluding volatile fresh food items, will increase 1.8 percent in fiscal 2023 from a year earlier.

Core CPI jumped 3.4 percent in April. At his first policy-setting meeting since Ueda took the helm in April, the BOJ maintained its ultralow rate policy, saying that it will aim to achieve the 2 percent target stably, accompanied by "wage increases," Mainichi Japan also reported.

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