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Striking right balance on growth, inflation difficult -
Ueda
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Japan likely to see cost-push inflation subside - Ueda
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Ueda to chair first BOJ policy meeting this week
(Adds comment on cost-push inflation, context on BOJ policy)
By Leika Kihara
TOKYO, April 26 (Reuters) - Bank of Japan Governor Kazuo
Ueda said on Wednesday the central bank's response to cost-push
inflation would depend on economic conditions.
"In general, dealing with cost-push inflation is very
difficult for central banks. On the one hand, you'd like to curb
inflation. On the other hand, you don't want to tighten monetary
policy knowing that cost-push inflation will cool the economy,"
Ueda told parliament.
"Striking the right balance is very difficult. It depends on
economic developments at the time, including where inflation
stood at the outset," he said.
Ueda added that Japan will see cost-push inflation subside
as prices of imported raw materials have likely peaked.
The remarks underscore the challenge global central banks
face as they struggle to rein in inflation despite a series of
interest rate hikes that have slowed growth.
The BOJ remains a dovish outlier as it focuses on supporting
the economy, arguing the recent rise in inflation is driven
mostly by rising import costs and therefore unsustainable.
But markets are rife with speculation that inflation and
wage growth, as well as the mounting cost of prolonged easing,
will prod the BOJ to soon phase out its controversial bond yield
control policy.
Ueda's comments compare with those of his predecessor
Haruhiko Kuroda, who repeatedly brushed aside the chance of
responding to cost-push inflation with monetary policy.
They also come ahead of the BOJ's two-day policy meeting
that begins on Friday, where the central bank is widely expected
to maintain ultra-loose monetary settings.
(Reporting by Leika Kihara
Editing by Shri Navaratnam and Sam Holmes)
