BOJ’s Ueda Highlights Risk of Inflation Falling Below Target

(Bloomberg) — New Bank of Japan Governor Kazuo Ueda struck a dovish tone once again by highlighting the risk of inflation slowing below the central bank’s target.

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Comparing the risk of inflation overshooting and falling below 2%, “it’s appropriate to conduct monetary policy by focusing on the latter risk” considering economic conditions, Ueda told reporters in Washington Wednesday.

Coming three days after Ueda took the BOJ’s top position, his comments are likely to further boost speculation that the new governor won’t rush toward normalization, as his first policy meeting on April 27-28 approaches.

Some economists said that during his inaugural presser as governor Monday, Ueda showed he was slightly more cautious about tweaking the yield curve control program than the market had previously thought.

Read more: BOJ’s Ueda Says Appropriate to Keep Policies Unchanged for Now

At his first Group of Seven meeting as central bank chief, Ueda said he told his counterparts that the BOJ will continue with monetary easing as Japan’s price gains are expected to slow to below 2%, essentially inheriting his predecessor Haruhiko Kuroda’s stance on policy.

Japan’s inflation situation is very different from other nations, Ueda also said, as central banks abroad are still aggressively tightening policy to bring inflation under control.

–With assistance from Paul Jackson.

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