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BOJ's Ueda: Underlying inflation still a bit below target

Published Aug 26, 2023 02:33PM ET Updated Aug 26, 2023 02:55PM ET
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© Reuters. FILE PHOTO: Bank of Japan Governor Kazuo Ueda speaks at a group interview with media in Tokyo, Japan, May 25, 2023. REUTERS/Kim Kyung-Hoon
 
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JACKSON HOLE, Wyoming (Reuters) -Underlying inflation in Japan remains "a bit below" the Bank of Japan's 2% target, BOJ Governor Kazuo Ueda said at a Federal Reserve research symposium on Saturday, and as a result the bank will maintain the current approach to monetary policy.

"We think that underlying inflation is still a bit below our target," Ueda said. "This is why we are sticking with our current monetary easing framework."

Japan's core consumer inflation hit 3.1% in July, staying above the central bank's 2% inflation target for the 16th straight month, as companies continued to pass on higher costs to households.

Ueda said domestic demand was "still at a healthy trend" and business fixed-investment was "supported by record high profits."

Nevertheless, inflation "is expected to decline" from here, he said, with the underlying trend still less than the target.

The BOJ has said it needs to maintain ultra-low rates until it is clear that robust domestic demand and higher wages replace cost-push factors as key drivers of price gains, and keep inflation sustainably around its target.

Investors have been waiting for hints of when the BOJ may change its policy of yield curve control, under which the bank holds short-term interest rates at -0.1% and the 10-year bond yield around 0% as part of efforts to prop up growth and sustainably achieve its 2% inflation target. It also sets an allowance band of 50 basis point around the 10-year yield target. The BOJ nominally kept the band unchanged last month but said it would now allow the 10-year yield to rise to as much as 1.0%.

BOJ's Ueda: Underlying inflation still a bit below target
 

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Comments (4)
Jeffri Kainama
Jeffri Kainama Aug 27, 2023 12:47PM ET
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As BOJ allow the 10 year to rise higher then previous lvl …i think we can see Yen strengtening a bit
Milan Shukla
Milan Shukla Aug 26, 2023 6:33PM ET
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he's paying price for being member of G7. saving hegemon boss
Boyan Davidov
Boyan Davidov Aug 26, 2023 6:20PM ET
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This guy works for the FED
Isaac quan
Isaac quan Aug 26, 2023 3:38PM ET
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does this means that the yen is strengthening?
Popat Popat
Popat Popat Aug 26, 2023 3:38PM ET
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plain English translation: BOJ may not increase rate soon. which means, yen should stay weak vs USD due to rate difference between Japan and USA.
 
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