New BOJ chief Ueda sticks to upbeat view on wages, global economy

New BOJ chief Ueda sticks to upbeat view on wages, global economy
FILE PHOTO: New Bank of Japan Governor Kazuo Ueda attends a news conference at the bank headquarters in Tokyo, Japan, April 10, 2023. REUTERS/Kim Kyung-Hoon/Pool

WASHINGTON: Bank of Japan Governor Kazuo Ueda said he expects the global economy to rebound after a period of slowdown which will help keep domestic wages rising, maintaining the bank’s upbeat economic outlook.

But Ueda said he told his G20 counterparts the central bank intends to keep monetary policy ultra-loose since inflation, which is now around 3 per cent, is expected to slow back below its 2 per cent target toward the latter half of this fiscal year.

“The BOJ’s forecasts already take into account the chance of a global economic slowdown. But they don’t see a severe global recession as a baseline projection,” Ueda told a news conference on Thursday (Apr 13) after attending the Group of 20 (G20) finance leaders’ meeting in Washington.

“As our base scenario is for global growth to pick up after a period of slowdown, Japan’s wages will likely keep rising,” he said.

The remarks came after the International Monetary Fund on Tuesday trimmed its 2023 global growth outlook, and warned that a severe flare-up of financial system turmoil could slash output to near-recessionary levels.

Ueda said his debut international meeting was fruitful and gave him the chance to meet with many overseas counterparts, adding that deepening personal trust with them was crucial to engage in frank discussions on global economic issues.

Ueda took office on Sunday, succeeding Haruhiko Kuroda who deployed massive monetary stimulus during his decade-long helm that is now drawing criticism for distorting bond markets and straining financial institutions’ profit.

While markets have been rife with speculation he will soon phase out Kuroda’s stimulus, Ueda has consistently stressed the need to maintain an ultra-loose policy until a more durable rise in wages and inflation can be foreseen.

Markets are focusing on the BOJ’s first policy meeting chaired by Ueda to be held on April 27-28, when the board will produce fresh quarterly growth and inflation forecasts extending through fiscal 2025.

“It’s been just a week since I took office and now I am on a business trip. I’ll think about it closely once I’m back,” Ueda said when asked about prospects for the April policy meeting.

Source: Reuters