© Reuters. FILE PHOTO: Bank of Japan Governor Kazuo Ueda attends a press conference after a policy meeting at BOJ headquarters in Tokyo, Japan December 19, 2023. REUTERS/Issei Kato/File Photo
By Leika Kihara
SAO PAULO (Reuters) -Bank of Japan Governor Kazuo Ueda said on Thursday it was too early to conclude that sustained achievement of the central bank’s 2% inflation target can be foreseen, stressing the need to scrutinise more data on the wage outlook.
“I don’t think we are there yet,” Ueda told a news conference after attending the G20 finance leaders’ meeting in Sao Paulo, when asked whether achievement of the price goal was already in sight.
“We need to confirm whether a positive wage-inflation cycle would kick off and strengthen,” Ueda said, adding that companies’ annual wage negotiations with unions later this month would be crucial in making the judgment.
With inflation having exceeded 2% for well over a year, many market players expect the BOJ to end its negative interest-rate policy by April.
Ueda’s remarks contrasted with those by BOJ board member Hajime Takata in Japan earlier on Thursday, who said sustained achievement of 2% inflation was already in sight.
The yen and Japanese bond yields rose after Takata’s hawkish remarks, which fueled speculation the BOJ could end negative rates in March rather than the widely held view that such a move would come in April.
Ueda said there was no change to the BOJ’s view that Japan was on track for a moderate economic recovery, despite recent data showing the country suffered its second straight quarter of contraction in the October-December period.
“While real wages may not immediately turn positive, there’s hope that this year’s annual wage talks will yield solid results that would give consumption a sustained boost,” Ueda said.
Capital expenditure also will likely increase, given companies are retaining strong investment plans, he added.
The BOJ has stressed its readiness to phase out its massive stimulus once it has judged that Japan can achieve its inflation target in a stable, sustainable fashion.
Markets are focusing on BOJ officials’ language on how certain they are about Japan’s prospects for sustainably achieving 2% inflation.