BOJ Governor warns of highly uncertain salary, price outlook

Bank of Japan Governor Kazuo Ueda stated that there is “extremely significant uncertainty” about whether corporations will continue to raise prices and salaries, emphasizing the bank’s determination to maintain ultraloose monetary policy.

“A cautious assessment of the global economic picture, warning of the consequences of aggressive US interest rate rises and slowing Chinese development,” Ueda said in a speech to business executives in Osaka, Japan’s westernmost metropolis.

The key to the monetary policy outlook is whether solid wage growth and consumption, rather than cost pressures from rising import costs, become the primary drivers of inflation, according to Bank of Japan Governor Kazuo Ueda.

“There are some signals of change in corporate pay and pricing setting behavior. But there is a lot of uncertainty about whether these changes will spread,” he added.

On Friday, the BOJ maintained ultralow interest rates and its commitment to keep supporting the economy until inflation stably reaches its 2% target, implying that it was not in a hurry to wind down its enormous stimulus program.