BOJ aims to meet 2% inflation goal by keeping easy policy – Ueda
FILE PHOTO: Bank of Japan Governor Kazuo Ueda participates in a news conference at the Fairmont Washington D.C. Georgetown hotel in Washington, U.S., April 13, 2023. REUTERS/Elizabeth Frantz
By Tetsushi Kajimoto
TOKYO (Reuters) – Japan will stay the course to reach the central bank’s 2% inflation target by continuing monetary easing even though it may take time, Governor Kazuo Ueda said on Tuesday, signalling his stance to maintain loose conditions.
Speaking at the lower house financial committee of parliament, Ueda said he saw no immediate need to review a joint statement issued with the government about a decade ago.
The joint statement, which is not legally binding, stipulates the respective roles the government and the Bank of Japan (BOJ) should each play to pull the country out of deflation.
“We are going to approach meeting the 2% inflation target by keeping to monetary easing, although it may take time,” Ueda said. “The joint statement is appropriate and I don’t see any immediate need to revise the target.”
Ueda stressed the need for Japanese firms to boost investment in human capital, saying that economic growth should bear the fruits of higher wages and sustain inflation. He praised government-led reforms allowing flexible way of working, which he said has contributed to stronger economic growth.
In an earlier parliamentary session, Ueda, pressed for his views on Japan’s fiscal policy, defended the central bank’s debt purchases.
The BOJ is buying Japanese government bonds (JGBs) as part of efforts to achieve its 2% inflation target, not to monetise debt.
“The BOJ’s JGB purchases are managed out of the need of conducting monetary policy with the aim of achieving the 2% price stability target,” Ueda told the lower house financial committee of parliament. “We have no intention of helping the government acquire financial sources.”
As part of its yield control policy and quantitative easing, the central bank purchases a massive amount of JGBs as well as risky assets such as exchange-traded funds and real estate investment trusts.
In his first appearance in parliament since assuming office on April 9, Ueda faced lawmakers’ questions on fiscal issues, as Japan scrambles to fund its plan to double defence outlays amid growing security concerns about China and North Korea.
Some ruling party lawmakers are considering extending a 60-year redemption rule for government debt to 80 years in order to create more fiscal space.
Speaking at the same session, Finance Minister Shunichi Suzuki said the finance ministry was not specifically considering reviewing the debt redemption rule for now.