Mar 19, 2022 (Nikkei) - The Bank of Japan will stay the course on monetary easing even as it predicts inflation will approach its 2% target in April, with costlier commodities and a weak yen doing more to raise consumer prices than years of BOJ efforts.
"There are extremely high uncertainties over how the situation surrounding Ukraine will affect Japan's economic activity and prices," the BOJ said in a statement following its policy meeting Friday.
The BOJ has sought to stoke healthy price growth by swelling Japan's money supply. But Japan's recent uptick in inflation stems from supply uncertainty overseas, not from an economic recovery at home, meaning Japan is essentially bleeding money.
Supply concerns after Russia's invasion of Ukraine drove U.S. crude oil futures to over $130 a barrel earlier this month, the highest point since the summer of 2008, although some of these gains have ebbed. Copper, aluminum and wheat prices have jumped as well.
Japan's corporate goods price index, which measures inflation in business-to-business transactions, logged its largest increase in 41 years last month, and is expected to continue rising in the coming months.
Despite the outlook for inflation, the BOJ stood pat on its monetary easing Friday. "It is not necessary or appropriate to tighten our monetary policy," BOJ Gov. Haruhiko Kuroda told reporters.
But there are indications that sticking to its monetary easing may not provide the economic support the BOJ intends.
