Bank of Japan must maintain ultra loose monetary policy as inflation remains fairly below that of other economies, said Governor Haruhiko Kuroda.
Taming inflation has lead central banks across the globe, including the U.S. Federal Reserve and the Bank of England, to withdraw pandemic stimulus measures and raise interest rates.
Inflation remains lower in Japan due to delayed economic recovery and the public’s sticky deflationary mindset where households and firms act on the assumption that prices won’t rise much, Kuroda said.
“In Japan, nominal wages haven’t risen much. It’s hard to see inflation sustainably reach our 2% target unless wages rise in tandem with prices,” Kuroda told parliament on Friday.
“It’s important to maintain powerful monetary easing to support the economy, and help generate steady wage and price growth,” he said.
