Jan 18 (Reuters) – The Bank of Japan raised its inflation forecast on Tuesday and signaled that recent commodity price increases would intensify, the latest sign of its belief that Japan is on a sustainable path out of deflation. Read more

The central bank also revised growth forecasts for the next fiscal year upwards and offered a more optimistic view of the economy than three months ago, taking into account the recent spike in cases of the Omicron coronavirus variants, At least for the moment.

As widely expected, the BOJ left unchanged a target of -0.1% for short-term interest rates and a commitment to guide long-term rates around 0% at a two-day meeting that s ended on Tuesday.

Here are excerpts from BOJ Governor Haruhiko Kuroda’s comments during his post-meeting press conference, which was conducted in Japanese, as translated by Reuters:

MONETARY EASING

“Consumer inflation is expected to remain around 1% through the end of the BOJ’s projection period. As such, there is no need to alter the BOJ’s monetary easing.”

INFLATIONARY PRESSURE

“Japan has recently seen inflationary pressure intensify. This is partly due to an improvement in the output gap, reflecting a recovery in the Japanese economy. When looking at Japan’s past experience, such as in 2008 , the price gains driven by rising raw material costs had been temporary.”

SUSTAINED INFLATION

“For inflation to become sustainable, we need to see an increase in medium to long-term inflation expectations.”

SALARY INCREASES

“As corporate profits rise, the labor market could tighten and lead to a moderate increase in wages. The government is also using tax reforms to encourage wage increases. There is also hope for savings to stimulate consumption These are positive factors that could encourage households to become more accommodating to price increases.”

POSITIVE ECONOMIC CYCLE

“We will maintain strong monetary easing until we see wage and price growth picking up sustainably and leading to a positive business cycle.”

NO DEBATE ON RISING INTEREST RATES

“We are not debating an interest rate hike…As the report shows, we are not yet in a situation where inflation is steadily accelerating towards the BOJ target. The members’ median forecast of the Board of Directors is inflation of around 1%. Under these conditions, we have absolutely no plans to raise rates or change our accommodative monetary policy.”

Reporting by Leika Kihara; Editing by Sherry Jacob-Phillips

Our standards: The Thomson Reuters Trust Principles.