Bank of Japan Governor Ueda speech, full text. Patiently maintaining monetary easing.

<p>Ueda is speaking in Osaka. Headlines via Reuters:</p><ul><li>
Japan's economy recovering moderately</li><li>Our basic stance is
that we must patiently maintain monetary easing</li><li>Current policy
framework has big stimulative effect on economy, but at times could
cause big side-effects</li><li>BOJ's July move
helped heighten sustainability of our monetary easing framework</li><li>Our baseline
scenario is for key driver of inflation to gradually switch,
strengthen virtuous wage-inflation cycle</li><li>Effect of rising
import prices likely to gradually dissipate</li><li>Uncertainty
surrounding our baseline scenario is very high, not sure at this
stage whether this will materialize</li><li>There is good chance
wage growth will accelerate as competition for talent intensify</li><li>Changes in corporate
behaviour could speed up more than expected</li></ul><ul><li>
On the other hand, wages, prices may struggle to rise if Japan's
economy is hit by negative external or internal shocks</li><li>Many
firms still have not decided whether to hike wages significantly, so
we must scrutinise whether changes in corporate wage-setting
behaviour could be sustained</li></ul><ul><li>Stable, sustainable achievement of 2% inflation not yet in sight</li><li>Japan's economy is
at critical stage on whether it can achieve a positive wage-inflation
cycle</li></ul><ul><li>
Must continue to be vigilant to chance past sharp US rate hikes could
affect economy, financial system with a lag</li><li>Chinese economy's
slow pace of pick-up is also worrying</li></ul><ul><li>
It is true inflation is exceeding 2% for prolonged period, but that
alone cannot lead us to conclude that Japan is close to stably,
sustainably achieving our target</li><li>
Key to whether Japan is close
to achieving our target is whether wage growth leads to moderate rise
in inflation</li><li><p>
Japan firms are changing prices more frequently than in past, which
is important sign suggesting wages and inflation could move in tandem</p></li></ul><p>There is plenty of nuance in Ueda's remarks. The summary is that bolded comment though. Without stable and sustainable 2% inflation there is little urgency for the Bank of Japan to tighten monetary policy. </p><p>Full text: </p><p><a href="https://www.boj.or.jp/en/about/press/koen_2023/data/ko230925a1.pdf" target="_blank" rel="nofollow">Japan's Economy and Monetary Policy (PDF)</a></p>

This article was written by Eamonn Sheridan at www.forexlive.com.