BOJ’s Kuroda says inflation could reach a 2% target through “multiple channels” through Reuters

By Leika Kihara

TOKYO (Reuters) – Haruhiko Kuroda, the governor of the Bank of Japan, said on Wednesday that the country’s consumer inflation could approach its 2% target as commodity costs drive up wholesale prices.

But he said the central bank will stick to its ultra-loose monetary policy to ensure higher prices and higher wages and a recovery in the economy.

“It is true that consumer inflation is close to 2% through various channels,” Kuroda told parliament.

“But all that is desirable is to continually revitalize the economy and boost corporate profits, which will lead to higher wages and inflation. We will be patient to achieve this ultra-easy policy as soon as possible,” he said.

Kuroda also said that recent increases in wholesale prices will not immediately drive up consumer inflation, even though Japanese companies tend to avoid price increases even if the cost increase hits margins.

“I don’t think the Japanese economy is in a state of stagnation,” he said, ruling out the possibility that the country could face an economic downturn with higher inflation.

Japanese wholesale inflation hit a record 9.0% in November, boosting earnings for the ninth consecutive month as rising price pressures and rising raw material costs rose.

But core consumer inflation remains close to zero as companies remain cautious about worrying about passing on costs to consumers so that cost-sensitive households can keep up with spending.