Kuroda: "Japan's Inflation Will Not Stay in the 4% Range... Can Be Managed with Interest Rate Hikes"

Kuroda Denies Sustained 3-4% Inflation Rate
Claims Interest Rate Hike Possible if Problematic
Self-Praises Deflation Resolution During Tenure

[Image source=Yonhap News]

Bank of Japan (BOJ) Governor Haruhiko Kuroda stated on the 29th that Japan's consumer price inflation rate will not continuously remain in the 3-4% range.

Governor Kuroda made this remark during the House of Representatives Committee on Financial Affairs, saying that it was difficult to assume an inflation rate of 3-4% when setting the price target.

In February, Japan's core Consumer Price Index (CPI) rose 3.1% year-on-year, showing a downward trend for the first time in 13 months. This was in line with market expectations, while the previous month's core CPI recorded 4.2%, marking the highest level in 41 years. The recent slowdown in inflation is analyzed to be the result of government subsidies aimed at reducing household burdens caused by the sharp rise in energy prices. Since January, the Japanese government has been supporting 20% of electricity bills for each household for nine months.

The BOJ recently observed that the rapid price increases in Japan were a temporary phenomenon caused by rising raw material prices due to the Russia-Ukraine war. The BOJ expects the core CPI to fall below the 2% inflation target by the end of this year.

Furthermore, Governor Kuroda emphasized that even if the inflation rate continues to remain in the 3-4% range, it can be managed through various measures, including interest rate hikes.

During the meeting, he also evaluated his tenure by stating that Japan has escaped deflation since he took office. Governor Kuroda said, "Since I assumed the governorship in 2013, hourly wages in Japan have increased, and workers' incomes have tended to rise," adding, "It is true that Japan has escaped deflation during my 10 years in office."

Governor Kuroda, who has led the BOJ for 10 years since March 2013, will conclude his term on the 8th of next month. Following Kuroda, who set the record for the longest tenure, economist Kazuo Ueda will assume the governorship.