BOJ Kuroda avoids short-term possibility of easy policy exit

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TOKYO — Bank of Japan (BOJ) Governor Haruhiko Kuroda on Monday dismissed the possibility of a near-term exit from ultra-accommodative monetary policy, but expressed hope that intensified shortages of workforce will induce companies to raise wages.

Kuroda said the BOJ’s decision last week to widen the margin of tolerance around its yield target was intended to reinforce the effect of its ultra-accommodative monetary policy, rather than a first step towards withdrawing its policy. massive stimulus program.

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“This is certainly not a step towards an exit. The Bank will aim to achieve the price target in a sustainable and stable manner, accompanied by wage increases, by continuing monetary easing under control of the yield curve” , Kuroda said in a speech at a meeting of Japanese business lobby Keidanren.

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He also said average consumer inflation in Japan is likely to slow below the BOJ’s 2% target over the next fiscal year as the effects of soaring import costs dissipate.

But Kuroda said wage growth is likely to pick up gradually due to intensifying labor shortages and structural changes in Japan’s labor market, which are driving up wages for temporary workers and increasing labor. number of permanent workers.

« Labour market conditions, especially for non-regular employees, are expected to tighten further, » he said.

“As the Japanese economy recovers, labor demand is expected to increase, especially in the face-to-face service industry,” Kuroda said.

The BOJ shocked the markets last week with a surprise change to its monitoring of bond yields. The move, which allows long-term interest rates to rise further, was intended to mitigate some of the costs of prolonged monetary stimulus. (Reporting by Leika Kihara; Editing by Edmund Klamann)