BOJ Governor nominee Ueda's comments at parliamentary hearing

Reuters reported that Japan's lower house of parliament is conducting confirmation hearings on the government's nominee for the new central bank governor, Kazuo Ueda, on Friday.

Following are excerpts from Ueda's comments, in Japanese, as translated by Reuters:   

"Monetary policy must be conducted by closely watching the economic and price outlook. Japan's economy is recovering from the impact of the COVID-19 pandemic. But uncertainty regarding the economy, prices and markets is extremely high. Consumer inflation is at 4%, above the Bank of Japan's (BOJ) target, but the rise is driven mostly by rising import prices. The rise is not driven by strong demand."

Consumer inflation is likely to fall below 2% in the latter half of the next fiscal year. It takes time for the effect of monetary policy to appear on the economy. It's standard practice to act preemptively to demand-driven inflation, but not respond immediately to supply-driven inflation. Otherwise, the BOJ will be cooling demand, worsening economy and pushing down prices by tightening monetary policy."

Japan's trend inflation is likely to rise gradually. But it will take some time for inflation to sustainably and stably achieve the BOJ's 2% target.

"With the BOJ's current policy, Japan is no longer in a state described as deflation. It's true there are various side-effects emerging from the stimulus. But the BOJ's current policy is a necessary, appropriate means to achieve 2% inflation."

USD/JPY update

USD/JPY is starting to sink to session lows of 134.07 so far.