Bank of Japan Signalled Inflation May Approach 2%

In a parliamentary speech, Bank of Japan's governor said inflation may approach target of 2% amid rise in wholesale prices

Bank of Japan Governor Haruhiko Kuroda on Wednesday said inflation in Japan may approach his target of 2% due to rising raw material costs pressuring wholesale prices.

However, he indicated the central bank would maintain loose monetary policy to accommodate to the surging inflation.

“It’s true there’s a chance consumer inflation will approach 2% through various channels,” Kuroda told parliament.

“But what’s desirable is for the economy to recover steadily and push up corporate profits, thereby leading to higher wages and inflation. We’ll patiently maintain ultra-easy policy to achieve this at the earliest date possible,” he said.

However, he remarked rising wholesale prices wont push up consumer inflation immediately since Japanese firms are known not to hike prices when rising cost hits margin.

He further added “I don’t think Japan’s economy is in a stage of stagflation”.

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