DAVOS, Switzerland : Bank of Japan Governor Haruhiko Kuroda said on Friday the central bank will continue its current “extremely accommodative” monetary policy to achieve its 2 per cent inflation target in a stable, sustainable manner.
“Our hope is that wages will start to rise, and that could make our 2 per cent inflation target met in a stable and sustainable manner. But we have to wait” for some time, he told a panel at the World Economic Forum (WEF) annual meeting.
Kuroda said the BOJ’s decision to widen the band around its 10-year bond yield target was “perfectly right,” brushing aside criticism that the move failed to iron out market distortions, and instead fueled speculation of additional tweaks to its yield curve control (YCC) policy.
Japan’s core consumer prices in December rose 4.0 per cent from a year earlier, double the central bank’s 2 per cent target, hitting a fresh 41-year high and keeping alive market expectations the central bank could phase out ultra-low interest rates.
Kuroda said December’s rise in inflation was largely caused by higher import costs, adding that consumer inflation will likely start to slow from February and will be less than 2 per cent on average in the fiscal year that begins in April.
“All in all, the government’s policy, coupled with the BOJ’s extremely accommodative policy, have been successful in changing Japan’s economic structure and growth prospects,” he said.
“But our 2 per cent inflation target has not been achieved in a sustainable, stable manner,” he said. “That is the only regret I have,” Kuroda said, speaking of his decade at the BOJ helm that will end when his term expires in April.