Kazuo Ueda Says It Is Unclear How Long Japan Can Sustain 2% Inflation

Japan’s inflation has reached policymakers’ 2% target, but Bank of Japan Governor Kazuo Ueda said it is unclear how long that level can be maintained. According to Sina Finance, Ueda made the remarks during a question-and-answer session after a speech at the IMF on Friday, saying underlying inflation was at 2% and that the goal was to keep it there. He said it was unknown whether the current balance could be maintained for a long time, and that 2% inflation had not yet become fully established in Japanese society. In a discussion with IMF Managing Director Kristalina Georgieva, Ueda gave no specific guidance on the central bank’s willingness to raise interest rates further. He described reaching the inflation target as an important milestone, but said more work remained and that appropriate monetary policy adjustments were needed to keep inflation at that level for years to come. Earlier, Ueda spoke about the history of Japan’s current account surpluses and noted signs of renewed corporate risk appetite. He said bank lending growth had recently exceeded 5%, its fastest pace in 30 years, and that corporate risk appetite appeared to be recovering with the return of moderate inflation.