Ueda Says Chance of Hitting BOJ Price Target to Rise From Summer | Mint

(Bloomberg) -- Bank of Japan Governor Kazuo Ueda said he sees the possibility of achieving the central bank’s inflation target steadily rising between the summer and autumn, according to a report in the Asahi newspaper. 

In his first media interview after the central bank pushed up interest rates for the first time since 2007 last month, Ueda said the likelihood of attaining the target will rise as the results of spring wage talks are gradually reflected in inflation, the Asahi reported Friday. The interview was conducted on Wednesday, it said. 

The comments suggest the BOJ wants to confirm the spread of wage gains and its impact on services prices before raising rates again. Ueda also reiterated his view that the bank will respond to foreign exchange rate movements it they impact the virtuous cycle of wages and price growth targeted by the bank in a way that cannot be ignored.

Read more: Japan’s Yen Intervention Strategy Faces Big Test From US Data

After the BOJ ended the world’s last negative interest rate on March 19, the yen surprised government currency officials by continuing to weaken. Since then, officials have ramped up their warnings over possible currency intervention. The yen dropped to the lowest level since 1990 last week. 

Ueda said in the interview that he ended the BOJ’s large-scale monetary easing program because the certainty for attaining a virtuous cycle has risen to 75% and if that goes up to 80% or 85%, that would be a factor to move rates again. The BOJ set its benchmark rate in a range between 0% and 0.1%. 

Rengo, Japan’s biggest labor union federation, has reported the largest wage increases since 1991 in annual pay negotiations. Those gains are expected to be reflected in wages from the start of this fiscal year this month toward summer.    

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Published: 05 Apr 2024, 06:33 AM IST

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