BOJ’s Amamiya: Central bank must support economy with monetary easing as recovery not solid

Bank of Japan (BOJ) must support the economy with monetary easing as recovery is not solid and wage development remains uncertain, the central bank Deputy Governor Masayoshi Amamiya said on Thursday.

Additional comments

We are aiming to achieve average 2% inflation, not a temporary rise to that level.

We will judge sustainability of inflation, looking comprehensively at various indicators, price outlook, output gap, inflation expectations and wage moves.

What's important is to create positive cycle where wages, inflation rise simultaneously.

Japan's real interest rates are falling as households' inflation expectations heightening, while nominal rates are kept low.

We must not loosen our grip in keeping monetary conditions easy as there is no prospect yet of meeting our 2% inflation target sustainably.

BOJ will seek sustained, stable achievement of price target, accompanied by wage rises via easy monetary policy.

Consumption recovery becoming clearer but recent spike in covid inflation cases worrying.

Consumer sentiment worsening due to rising energy, food prices.

Corporate profits remain elevated as a whole due partly to impact of weak yen.

If raw material costs remain high for prolonged period, pace of wage rise may not catch up with that of inflation and could hurt economy, consumption.

BOJ must be vigilant to financial, forex moves and their impact on economy, prices.