TOKYO- The Bank of Japan must maintain ultra-loose monetary policy as recent cost-push inflation could hurt the economy, Governor Haruhiko Kuroda said on Tuesday, highlighting the widening gap with the US Federal Reserve’s aggressive tightening plan.
Kuroda said consumer inflation is expected to accelerate as some firms pass on rising energy and food costs to households.
“Instead of leading to higher wages and corporate profits, such cost-push inflation will weigh on the economy in the long run by hurting corporate profits and households’ real income,” Kuroda told parliament.
While nominal wages may increase “quite significantly,” the rise in consumer inflation may sap households’ purchasing power by pushing down price-adjusted real wages, he added.
“Given recent price developments, we need to patiently maintain our powerful monetary easing,” Kuroda said.
