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© Reuters. FILE PHOTO: Bank of Japan Governor Kazuo Ueda attends a press conference after their policy meeting at BOJ headquarters in Tokyo, Japan December 19, 2023. REUTERS/Issei Kato/FILE PHOTO
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By Leika Kihara
TOKYO (Reuters) – Bank of Japan Governor Kazuo Ueda provided an optimistic outlook on Monday, indicating that the likelihood of achieving the central bank’s inflation target was “gradually rising.” He further added that the bank would consider changing policy if prospects of sustainably achieving the 2% target increased “sufficiently”.
Ueda emphasized that the key to sustained price increases relies on whether wages continue to rise next year and lead to further increases in service prices. He cited the need for a “virtuous cycle” between wages and prices to intensify in order to achieve their price target in a sustainable and stable manner.
While Ueda did not specify a specific timing for changing the ultra-loose monetary stance, he stated that the bank will carefully examine economic developments and decide on future monetary policy in an appropriate manner.
The Japanese government bond market had a muted reaction to Ueda’s remarks, with yields falling as the BOJ conducted a regular bond buying operation across the curve.
Ueda concluded by stating that the likelihood of Japan’s economy achieving its price target is gradually rising, but uncertainties surrounding the economy and prices call for careful examination of firms’ wage- and price-setting behavior.
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