Tokyo, Haruhiko Kuroda, the governor of the Bank of Japan, said Wednesday that the recent rise in prices caused by higher import costs could hurt the economy. He said the central bank would keep its monetary policy ultra-loose.
Consumer prices are going to go up a lot because energy prices are going up a lot and companies are going to keep passing on the cost of raw materials to households, said Kuroda.
While the head of the BOJ said that the world’s third-largest economy was likely to start growing again, he also said that there were risks. Consumption had shown signs of improvement, and exports were bolstered by strong overseas demand.
“However, the outlook is still very uncertain because of the effects of the pandemic, as well as the developments in Ukraine and the effect on commodity prices,“ Kuroda said in a speech to a meeting of trust banks.
He said that the BOJ needs to keep pumping money into the economy to keep it from falling back to pre-pandemic levels.
Kuroda said Japan’s economy is being hurt by rising inflation, which is caused by rising import costs. This lowers real income for households and corporate profits.
Global commodity prices have risen because of the war in Ukraine and because the Japanese yen is weak. This has made it more expensive for resource-poor Japan to buy things from other countries, which could slow the country’s economic recovery.
Japan’s Finance Minister, Shinichi Suzuki, told markets not to push the yen down too far. He said earlier that “undesirable” changes in the yen were not good.
Despite that, the yen fell below $126 on Wednesday for the first time since May 2002.