By Leika Kihara
TOKYO (Reuters) – Bank of Japan Governor Kazuo Ueda said on Wednesday that the central bank will discuss an exit strategy from its ultra-loose monetary policy and communicate it to The public, once the prospect of stable inflation is in place.
Speaking in parliament, Ueda said it was too early to discuss specific plans for exiting the BOJ’s massive stimulus program, including how to sell its large holdings of exchange-traded funds (ETFs) .
But he said that if the central bank did so in the future, it might sell the assets at market prices.
“BoJ’s ETF purchases help support consumption and capital spending,” preventing market instability from hurting household and business confidence, Ueda said. stimulus package. We think Japan will need more time to achieve our price target on a sustained and stable basis,” he said.
Under a policy called yield curve control, the BOJ set a short-term -0.1 % long-term interest rate target and capped 10 year bond yields near zero. It also pledged to buy large amounts of ETFs during times of market turmoil as part of efforts to sustainably meet its 2% inflation target Part.
Japan’s core consumer inflation hit 3.1% in March, well above the central bank’s target and an index excluding fuel costs rose at its fastest annual pace in four decades, suggesting prices Pressure builds.
The BOJ described price increases as temporary and driven by rising import costs, but some on the nine-member committee warned that Inflation may overshoot as wage growth picks up.
With inflation overshooting the BOJ’s target since April 2022, the market has been rife with speculation that Ueda will soon Phase out its predecessor’s massive stimulus program, which drew public criticism for distorting market pricing and squeezing bank profits.