Bank of Japan (BOJ) Governor Kuroda said consumer prices may continue to stay around 2 percent for about a year but are likely to fall to around 1 percent in the new fiscal year starting in April 2023.
Bank of Japan (BOJ) Governor Haruhiko Kuroda said that Japan’s economy is not much affected by the rise in global inflation and therefore the central bank will not change its ultra-loose monetary policy.
Kuroda pointed out that the country’s 15-year deflation experience has kept wage growth under pressure.
Kuroda said Japan’s core consumer price index rose 2.1 percent for the second consecutive month in May, but the increase was almost entirely due to rising energy prices.
Consumer prices had remained above the BOJ’s target level for the second month in a row, rising above 2 percent.
Kuroda said consumer prices may continue to stay around 2 percent for about a year, but are likely to fall to around 1 percent in the new fiscal year starting in April 2023.
“Unlike other economies, Japan’s economy has not been much affected by the global inflationary trend, so monetary policy will remain expansionary,” Kuroda said.
Kuroda, who attended a seminar in Basel, said companies were “very cautious” about raising wages and prices after Japan’s 15-year deflation that began in 2013.
“The economy has recovered and companies have made high profits. The labor market has become tight. But wages and prices have not increased much,” Kuroda said.
Noting that it was “quite difficult” to assess the impact that many structural changes could have on the global economy, Kuroda said: “In any case, the objectives of central banks will remain the same. To achieve price stability through monetary policy, but in a rapidly changing world of uncertainty, the channels through which policies are transmitted may also change.”
