In his first press conference as new Bank of Japan Governor, Kazuo Ueda stated that the central bank will maintain its massive stimulus program, echoing the stance of the previous leadership. Ueda commented, “The BOJ’s current monetary easing is a very powerful one. We need to strive, as we have done so far, to appropriately grasp economic, price, and financial developments to see whether trend inflation will stably and sustainably achieve 2%.”
The governor acknowledged the side-effects of the BOJ’s negative rates, particularly on banks, but noted that banks seem to have sufficient buffers and financial intermediation is functioning. Ueda emphasized the necessity of maintaining negative rates, stating, “Given trend inflation has yet to hit 2%, it’s appropriate to maintain negative rates.”
Regarding Yield Curve Control (YCC), Ueda said, “When looking at current economic, price, and financial developments, it’s appropriate to maintain YCC for now.” He added that any major changes to YCC should be determined by evaluating the economic, price, and financial trends, while also weighing the benefits and costs of the policy.
Ueda noted some positive signs in inflation and wages, saying, “Trend inflation is rising somewhat. There’s also some positive signs in wages. There’s a good chance this will lead to stable, sustained achievement of higher, trend inflation.”
