Japan inflation on rising trend, says bank of Japan

2024.02.22 00:14

Japan inflation on rising trend, says bank of Japan

By Kristina Sobol  

Budrigannews.com – Bank of Japan Governor Kazuo Ueda addressed the nation, expressing his view that Japan’s inflation is on a rising trend, driven by a tight labor market that is pushing wages higher. He reiterated the bank’s stance that the conditions for ending negative interest rates are gradually materializing.

In his address to parliament, Ueda projected a positive economic cycle for Japan, with higher employment and wage growth leading to moderate increases in inflation. He noted the ongoing and steady increase in service prices and the gradual acceleration of trend inflation. Ueda emphasized the central bank’s commitment to guiding monetary policy appropriately in line with these developments.

Regarding the recent fluctuations in the yen’s value, Ueda refrained from providing specific comments, acknowledging that currency movements are influenced by a complex interplay of factors. He stressed the importance of stable currency movements that reflect underlying economic fundamentals.

Sources close to Reuters have suggested that the BOJ is poised to end negative interest rates in the coming months, despite Japan’s economy slipping into a recession. This decision is based on growing evidence that companies will continue to offer attractive pay packages in a tightening job market.

A Reuters poll revealed that more than 80% of economists anticipate the BOJ to raise short-term interest rates out of negative territory by April. However, expectations of persistently low borrowing costs in Japan have led to a depreciation of the yen, with its value hovering around 150 against the dollar. This level is seen by markets as increasing the likelihood of intervention by Japanese authorities to support the yen.