MNI BRIEF: BOJ's Ueda Sees Underlying CPI Toward 2% Target

Bank of Japan Governor Kazuo Ueda said Thursday that underlying CPI inflation, excluding temporary factors, is gradually moving toward the bank’s 2% target, and that the mechanism in which wages and prices rise moderately in tandem will be maintained.

Speaking to lawmakers, Ueda said prices – particularly for rice – remain influenced by cost-push factors, but noted that food prices overall are gradually increasing as companies pass on higher labour costs to consumers.

Ueda made no reference to the outlook for monetary policy.

He added that should long-term interest rates rise sharply, the BOJ would act to ensure stable rate formation through increased government bond purchases, fixed-rate operations, and fund injections. The Bank’s stance toward addressing sharp increases in long-term yields remains unchanged, he added. 

Ueda is scheduled to deliver a speech in early December ahead of the Bank’s next policy meeting, which is expected to provide a stronger signal on the BOJ’s next move. (See MNI POLICY: Ueda Dec 1 Speech Crucial For BOJ Hike Timing)