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Gov. Kazuo Ueda of the Bank of Japan expresses a positive outlook for the Japanese economy; Warns of excessive yen depreciation


The Yomiuri Shimbun
Kazuo Ueda, governor of the Bank of Japan, speaks at a symposium of the Yomiuri International Economic Society (YIES) at Tokyo Kaikan in Chiyoda Ward, Tokyo, on Wednesday.

Kazuo Ueda, the Governor of the Bank of Japan, gave his opinion on the current economic situation in Japan, saying: “Japan’s underlying inflation is moving firmly towards 2%, and it has been confirmed that the virtuous cycle between wages and prices is strengthening has become.” in his speech at a symposium of the Yomiuri International Economic Society (YIES) held at Tokyo Kaikan in Chiyoda Ward, Tokyo.

Regarding future policy decisions, Ueda said: “If there is a change in the outlook for economic activity and prices, or a change in the risks related to the outlook, that is without a doubt an appropriate reason to adjust the policy rate. ”

The BOJ changed the direction of its large-scale monetary easing policy by ending its negative interest rate policy at its March monetary policy meeting and then made no further changes at the April 26 Monetary Policy Meeting.

The BOJ will consider making monetary policy adjustments, such as additional interest rate hikes, while monitoring economic conditions and actual price developments, to achieve the target stable price inflation of 2%.

Ueda believed that “all indicators [that the BOJ is using to capture the trend in prices] have been gradually rising, meaning underlying inflation is almost certainly rising. At the moment, underlying inflation appears to be on an upward path towards the 2% level.”

On recent trends in the currency markets, Ueda said: “Rapid depreciation of the yen is unfavorable for the Japanese economy because it increases uncertainty, for example by making it difficult for companies to continue their business policies.”

After the Bank of Japan decided to continue its monetary policy in April, the yen depreciated on the currency markets, temporarily falling to the level of ¥160 per dollar on expectations that the interest rate differential between the United States and Japan will widen. .

Ueda said: “Monetary policy has no direct influence on exchange rate policy,” adding: “If exchange rate movements affect underlying price inflation, or if the risk of such movements increases significantly, we will have to take policy actions. ”

In the quarterly Outlook for Economic Activity and Price report released after the April meeting, the bank revised upward its forecasts for non-fresh food inflation in fiscal years 2024 and 2025 from its January forecasts and its forecast for set at 1.9% for the 2026 budget year. The outlook for inflation in the fiscal year 2024 was revised upwards, as indicated in the report, in light of higher crude oil prices since January and the high level of wage increases presented during this year’s spring wage negotiations .

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