In the face of mounting economic uncertainties, BoJ Governor Kazuo Ueda provided insights on Japan’s monetary stance and the regional economic dynamics. Bank of Japan, despite witnessing annual inflation of 3.1% in July, anticipates softening of this rate towards year-end.
Speaking on Saturday at the Jackson Hole Symposium, Ueda remarked, “We think that underlying inflation is still a bit below our target,” subsequently justifying their persistence with the current monetary easing framework by stating, “This is why we are sticking with our current monetary easing framework.”
Despite the inflationary indicators, health of Japan’s domestic demand remains a focal point for the central bank. Ueda highlighted that domestic demand appears to maintain a “healthy trend,” but swiftly added a caveat: “although that’s something that needs to be checked with” Q3 data.
Addressing the wider Asian economic landscape, Ueda did not mince his words, labeling China’s recent economic deceleration a “disappointment,” and highlighting July’s data as skewing “on the weak side.” Diving deeper into China’s challenges, he pinpointed, “The underlying problem appears to be the adjustment in the property sector and the spillover to the rest of the economy.”
However, it’s not all gloomy on the horizon. Ueda acknowledged the US economy’s resilience, noting its “relative strength” as a potential counterbalance, offering “some offset” to Japan amidst regional economic fluctuations.
