Haruhiko Kuroda Admits Rapid Consumer Price Growth
Haruhiko Kuroda (Bank of Japan Governor) told the consumer prices have grown quicker than he anticipated. The Governor added he projected the same pace in wage growth. That is, the nationwide core consumer price index (includes oil products but excludes volatile fresh food costs) increased 1.0% in February, comparing to 2017. Ex- fresh food and energy, the indicator was up just 0.5% yoy.
Still, the 2% inflation target is yet to be reached, thus the BoJ will maintain its stimulus program. Kuroda stated: "Prices are somewhat weak compared to the level of economic activity and the improvement in the output gap, but in the past year consumer prices have accelerated slightly".
As we know, Haruhiko Kuroda was reappointed to serve the second term as the Governor and his quantitative easing program has been repeatedly praised by the Prime Minister Shinzo Abe. But now, Kuroda says BoJ will eventually have to start normalizing the policy, by gradually ending the program. Economists are convinced that task won’t be the easy one.