BoJ Ueda: It’s probably more difficult to deal with an undershoot of inflation

In the press conference following BoJ’s decision to stand pat, Governor Kazuo Ueda said, “at present, inflation has exceeded 2% for 13 straight months but could fall below that level ahead. That’s why we are not normalizing monetary policy. But if that view changes sharply, we will have to change policy.”

“We expect inflation to moderate, but it’s true the pace of decline is somewhat slow,” he said. “But we’re still in the early stages of the moderation. There’s uncertainty on whether the future slowdown will be a gradual one, or a quite sharp one.”

“What’s important is not just our median forecast but how certain that forecast is … We won’t act just by looking at the median forecast. We’d like to look comprehensively at various data including distribution”.

“We have to consider what tools we have at our disposal when inflation overshoots, and when it undershoots. When we compare these, it’s probably more difficult to deal with an undershoot of inflation.”