TOKYO- Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said on Monday the merits of the bank’s current monetary policy outweigh the costs, stressing the need to maintain support for the country’s economy with ultra-low interest rates.
While the BOJ’s yield curve control (YCC) policy has helped stimulate the economy, it has had negative effects on market functions, Ueda told an upper house confirmation hearing.
“In guiding monetary policy, central banks must weigh the benefits and costs of each step,” Ueda said. “At present, the benefits of the BOJ’s current policy exceed the costs.”
The recent rise in Japan’s consumer inflation is driven by cost-push factors rather than strong demand, warranting the BOJ to maintain ultra-loose policy, Ueda said.
“There are various side-effects emerging, but the BOJ’s current policy is necessary and appropriate” to achieve its 2 percent inflation target, said Ueda, the government’s nominee to become the central bank’s next governor.
Japan kept its assessment of the economy unchanged in February as consumer spending remained on a recovery trend despite soft exports and factory output due to the global economic slowdown. – Reuters
