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By Tetsushi Kajimoto
TOKYO, April 12 (Reuters) - The Bank of Japan will
continue monetary easing to achieve its 2% inflation target
accompanied by wage hikes in a sustainable and stable manner,
new deputy governor Shinichi Uchida said on Wednesday.
The comment followed Ueda's view earlier that it was
appropriate to maintain the central bank's ultra-loose monetary
policy for now as inflation has yet to sustainably meet its 2%
target.
Ueda's repeated pledge to stand pat on policy may dim any
expectations for reversing the BOJ's easy money stance anytime
soon, particularly when global markets remain jittery about the
risk of contagion from U.S. and European banking sector
troubles.
Uchida said Japanese financial institutions are equipped
with sufficient capital and fund-raising bases, making any
impact from Western banking problems since March "limited."
Uchida was reading a speech at an annual gathering of trust
associations on behalf of Governor Kazuo Ueda, who is traveling
to Washington to attend the International Monetary Fund (IMF)
and World Bank group's spring meetings.
"The pace of price hikes is expected to slow towards the
middle of this fiscal year due to government steps to curb
energy prices and as the effects of companies passing on costs
wane," Uchida said.
"The BOJ will continue with monetary easing so as to achieve
the price stability target in a sustainable and stable manner,
while supporting the economy together with wage hikes."
More Japanese households are expecting prices to rise a year
from now, a BOJ quarterly survey showed on Wednesday, raising
pressure on the central bank to adjust or ditch its yield curve
control (YCC) policy.
The survey, closely scrutinised by the central bank to
determine the outlook for inflation, showed that the ratio of
Japanese households expecting prices to rise a year from now
stood at 85.7% in March, up from 85.0% in December.
On Monday, Ueda also said the BOJ must avoid being too late
in normalising policy, a sign that he would be open to tweaking
the controversial policy that caps the 10-year bond yield around
zero.
(Reporting by Tetsushi Kajimoto; Editing by Jacqueline Wong)
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