TOKYO (dpa-AFX) – Despite the new leadership and rising inflation, the Japanese central bank is apparently not about to change course quickly. The Bank of Japan should ease up monetary policy initially continue, said the designated new central bank chief Kazuo Ueda on Friday during a parliamentary hearing. Monetary policy changes are only conceivable when it becomes clearer where inflation is headed.
Ueda’s comments come against an environment of high inflation for Japan, but the central bank does not see this as sustainable. According to government figures on Friday, consumer prices excluding fresh food rose 4.2 percent in January compared to the same month last year. This is the strongest increase in around 41 years. The Japanese central bank pays particular attention to the rate.
Inflation in Japan is lower compared to other major economies, but high by Japanese standards. The government has therefore already initiated relief measures that should soon dampen official inflation rates. Nevertheless, inflation is likely to remain above the Bank of Japan’s target of 2 percent.
Ueda is set to succeed long-serving central bank governor Haruhiko Kuroda, whose term of office ends in April. The leadership transition is not without its challenges, as Kuroda has long been a major influence on Japan’s monetary policy. In particular, about ten years ago he implemented the monetary policy approach of the late ex-Prime Minister Shinzo Abe, which calls for an extremely loose monetary policy under the name Abenomics. Kuroda also stands for the still current control of capital market interest rates by the central bank.
Ueda can fundamentally imagine changes to this policy, which provides for specific target rates for short and long-term market interest rates. However, he kept a low profile with concrete statements. He also dampened excessive expectations of himself: “If I’m appointed governor, my mission is not to develop some kind of magical, special monetary policy.” It will probably take some time before the inflation target of two percent is sustainably achieved.
Ueda was once a member of the central bank’s monetary policy committee, but not too much is known about his current monetary policy stance.
After the holiday break the day before, the stock market in Tokyo went up comparatively significantly on Friday. The market strategists of Deutsche Bank referred to the statements by Ueda./bgf/jsl/jha/