Kazuo Ueda, who will replace the current head of the Bank of Japan Haruhiko Kuroda in April, said that despite the recent acceleration of consumer inflation in the country, which reached a new 41-year high in January, the Central Bank is not yet considering tightening monetary policy, as the price increase was due to cost-push factors rather than strong demand.
"Until a significant increase in trend inflation is recorded, the Bank of Japan will adhere to the current parameters of monetary policy," Ueda said, adding that now the advantages of the current monetary policy outweigh the costs, and the economy needs support with ultra-low interest rates.
Ueda also said that it is too early to comment on a possible change in the policy of the Bank of Japan, and stressed that the adjustment of policy parameters will vary depending on economic changes at the time.
As inflation exceeds the Bank of Japan's target, Ueda faces the challenge of phasing out yield curve control (YCC), which has attracted public criticism. However, Ueda stated that despite various side effects, the current policy of the Central Bank is necessary and appropriate to achieve the 2% inflation target.