Our basic stance is that we must patiently maintain monetary easing

Bank of Japan (BOJ) Governor Kazuo Ueda is holding a news conference following his meeting with business leaders in Osaka, western Japan, on Monday.

Key quotes

Japan’s economy recovering moderately.

Our basic stance is that we must patiently maintain monetary easing.

Current policy framework has big stimulative effect on economy, but at times could cause big side-effects.

BoJ’s July move helped heighten sustainability of our monetary easing framework.

Our baseline scenario is for key driver of inflation to gradually switch, strengthen virtuous wage-inflation cycle.

Effect of rising import prices likely to gradually dissipate.

Uncertainty surrounding our baseline scenario is very high, not sure at this stage whether this will materialize.

There is good chance wage growth will accelerate as competition for talent intensify.

Changes in corporate behaviour could speed up more than expected.

On the other hand, wages, prices may struggle to rise if Japan’s economy is hit by negative external or internal shocks.

Many firms still have not decided whether to hike wages significantly, so we must scrutinize whether changes in corporate wage-setting behaviour could be sustained.

Market reaction

In reaction to the above comments, USD/JPY is little changed, holding steady at 148.33.