The Central Bank of Japan (BOJ) needs to maintain its loose monetary policy as inflation rates are still far below when compared to other major economies, Governor Haruhiko Kuroda said.
The surge in high inflation has sparked concerns of central banks around the world, including the Federal Reserve (Fed) and the Central Bank of England (BOE) which have begun tightening and raising interest rates.
However, inflation is still stagnant in Japan following delays in the economic recovery from the coronavirus pandemic and the perception of households and firms that prices will not rise much.
According to Kuroda, nominal wages in Japan have not increased significantly and it is difficult to see inflation will reach the 2% target continuously unless wages increase in line with price increases.
Therefore, it is important that easing in monetary policy is maintained to support the economy and help generate stable wage and price growth, Kuroda said.
The statement came after the European Central Bank (ECB), considered the most dovish among other major central banks, had shocked the market with a hawkish turn after acknowledging about inflation risks and touting the possibility of an interest rate hike this year.
