Bank of Japan (BOJ) Governor Kazuo Ueda said on Tuesday that the central bank will start debating an exit from its ultra-loose monetary policy when inflation nears its 2% target.
Ueda told reporters that the BOJ will “carefully” consider the timing and pace of any policy change, and will “ensure that monetary policy remains accommodative” to support the economy.
The BOJ has maintained a negative interest rate policy and massive asset purchases since 2013 in an effort to boost economic growth and inflation. However, inflation has remained stubbornly below the BOJ’s target, and the central bank has faced increasing criticism for its easy-money policies.
Ueda’s comments suggest that the BOJ is finally preparing to wind down its ultra-loose monetary policy. However, he also stressed that the BOJ will be careful not to tighten policy too quickly, as this could damage the economy.
The timing of the BOJ’s policy exit is uncertain, but it is likely to depend on the outlook for inflation and the economy. If inflation continues to rise, the BOJ may be forced to act sooner rather than later. However, if the economy weakens, the BOJ may delay its policy exit.
The BOJ’s policy decision will have a significant impact on the Japanese economy. If the BOJ tightens policy too quickly, it could push the economy into recession. However, if the BOJ keeps policy too loose, it could allow inflation to spiral out of control.
The BOJ is in a difficult position, and it will need to carefully weigh the risks and benefits of its policy decisions.