Ueda is speaking in Osaka. Headlines via Reuters:
- 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 scrutinise whether changes in corporate wage-setting behaviour could be sustained
- Stable, sustainable achievement of 2% inflation not yet in sight
- Japan's economy is at critical stage on whether it can achieve a positive wage-inflation cycle
- Must continue to be vigilant to chance past sharp US rate hikes could affect economy, financial system with a lag
- Chinese economy's slow pace of pick-up is also worrying
- It is true inflation is exceeding 2% for prolonged period, but that alone cannot lead us to conclude that Japan is close to stably, sustainably achieving our target
- Key to whether Japan is close to achieving our target is whether wage growth leads to moderate rise in inflation
Japan firms are changing prices more frequently than in past, which is important sign suggesting wages and inflation could move in tandem
There is plenty of nuance in Ueda's remarks. The summary is that bolded comment though. Without stable and sustainable 2% inflation there is little urgency for the Bank of Japan to tighten monetary policy.
Full text:
Japan's Economy and Monetary Policy (PDF)
BoJ Governor Ueda
