Bank of Japan to maintain ultra-loose policy, downplays change expectations

The Bank of Japan’s Governor, Kazuo Ueda, has stated that the central bank will continue to maintain its ultra-loose monetary policy, as there remains a significant gap to achieve the 2% inflation target sustainably. Ueda’s comments downplay the expectations of a policy change in the near future. He told parliament, “We expect inflation to quite clearly slow below 2% toward the middle of the current fiscal year.”

Ueda added that inflation is likely to rebound after that, but there is high uncertainty regarding the outlook. One positive sign is the expected substantial increase in pay during this year’s annual wage negotiations, which could assist in breaking free from Japan’s deflationary mindset.

Ueda emphasised the bank’s stance, stating, “We will patiently continue monetary easing as there’s still distance to the achievement…