Wages and prices seem to be directed in the right path, with labour unions and big firms signalling the chance of sustained wage gains in 2024, BOJ governor Kazuo Ueda said, cautioning about uncertain conditions.
Maintaining an ultra-loose monetary policy, the Bank of Japan has kept its short-term rate target at minus 0.1 per cent and that for the 10-year government bond yield around nil.
It will continue to ramp up stimulus ‘without hesitation’, if needed.
Cautioning about uncertain conditions, the bank said wages and prices seem to be directed in the right path.
“The chance of trend inflation accelerating towards our price target is gradually heightening,” Ueda said in a press conference after a two-day meeting meeting. “But we still need to scrutinise whether a positive wage-inflation cycle will fall in place.”
Ueda offered no clear indication on how soon the central bank could exit negative rates, but said there ‘won’t be much data coming in’ between now and the next policy meeting on January 22-23.
The country has witnessed inflation above 2 per cent for over a year and some firms have indicated their preparedness to continue raising wages, increasing the probability of the central bank finally abandoning its dovish outlier image.
The central bank won’t rush into raising rates just because the US Federal Reserve could start cutting them soon, he said.
“But uncertainty over the outlook is extremely high and we have yet to foresee inflation sustainably and stably achieving our target. As such, it’s hard to show now with a high degree of certainty how we can exit,” he added.
The bank will aim to achieve the price stability target of 2 per cent in a sustainable and stable manner, accompanied by wage increases, the bank’s statement on monetary policy noted.
Fibre2Fashion News Desk (DS)