TOKYO: The Bank of Japan may weaken its monetary easing if the country’s underlying inflation grows to around 2%, Governor UEDA Kazuo said Tuesday.

“It will be possible to decide on slightly reducing the degree of monetary easing if underlying inflation rises toward 2%,” Ueda told a meeting of the Financial Affairs Committee of the House of Councillors, the upper chamber of Japan’s parliament.

Meanwhile, he said he has “no preconception” about when the central bank may additionally raise interest rates after carrying out its first interest rate hike in 17 years last month.

The BOJ will slightly accelerate the pace of weakening its monetary easing if the positive cycle of wages and prices strengthens further, while the weakening may be stopped or slowed significantly if prices are lower than expected, he added.

Regarding the yen’s recent softness despite last month’s interest rate hike, Ueda said that the BOJ may consider monetary policy responses if foreign exchange rate fluctuations have impacts on the economy and prices that cannot be ignored.

Ueda, who marked one year since becoming BOJ governor Tuesday, said that he was able to make policy changes as he was fortunate in various ways. He expressed a wish to respond appropriately, even if he faces difficult situations in the future.

JIJI Press