(Reuters) – The Bank of Japan maintained ultra-easy monetary settings on Tuesday in a widely expected move, as policymakers allow more time to determine whether wage increases will broaden enough to keep inflation sustainably at its 2% target.
Following are excerpts from BOJ Governor Kazuo Ueda’s comments at his post-meeting news conference, which was conducted in Japanese, as translated by Reuters:
WAGE-INFLATION CYCLE
“Prospects of higher wages are gradually affecting sales prices, which is leading to a gradual increase in service prices.”
“If we get further evidence that a positive wage-inflation cycle will heighten, we will examine the feasibility of continuing with the various steps we are taking under our massive stimulus programme. We can’t say now how it specifically will look like. But we think we can avoid any big irregularity (in the event we shift policy).”
PRICE TARGET
“We were able to confirm that the economy is moving in line with our projections on inflation … Our core-core inflation forecast is at 1.9%, very close to our 2% target. This was the case in October but it happened again this time, after close scrutiny. This is the biggest factor that made us more convinced than before that the likelihood (of sustainably achieving our price target) is gradually heightening.”
WHEN ASKED WHETHER AN EXIT FROM NEGATIVE RATE POLICY IS NEARING
“The prospects of seeing trend inflation hit 2% are gradually heightening. That’s a desirable development. But it’s hard to quantify how close we’ve come.”
WOULD BOJ HAVE IN MIND THE FUTURE INTEREST RATE PATH WHEN IT ENDS NEGATIVE RATES?
“Yes, that is obviously the case. Based on our current economic and price forecasts, we think we can avoid the risk of a severe, irregular policy shift.”
(Reporting by Leika Kihara; Editing by Subhranshu Sahu)
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