BOJ’s Ueda: not in rush to unwind ultra-easy policy – NHK

By Leika Kihara

TOKYO (Reuters) -Bank of Japan Governor Kazuo Ueda said he was in no rush to unwind ultra-loose monetary policy as the risk of inflation running well above 2% and accelerating was small, public broadcaster NHK reported on Wednesday.

There was a chance the BOJ could gain “quite a lot of information” from the bank’s regional branch managers’ meeting in mid-January, Ueda was quoted as saying, when asked about the chance of a policy change in January.

“For now, I don’t think the chance of this happening is large though,” Ueda said in an interview conducted on Tuesday.

Ueda said it was desirable for wages to rise next year at around the same pace as this year “or somewhat faster,” adding that the BOJ would also scrutinise to what extent companies will pass on higher labour costs to services customers.

He added that he was “quite not” convinced yet that Japan can foresee inflation sustainably achieving the BOJ’s 2% target, in stressing the need to keep ultra-loose policy for now.

While the BOJ will consider the wage and price outlook in deciding policy, the chance of pulling short-term interest rates out of negative territory next year “was not zero,” he added.

A key factor would be whether wage hikes will broaden to smaller firms in next year’s annual spring wage negotiations with unions.

The BOJ could make a decision even before the smaller firms’ wage talk outcome becomes available, if their profits turn out to be very strong, Ueda said.

With inflation exceeding its 2% target for well over a year, many market players expect the BOJ to end negative interest rates next year with some betting on the chance of action as early as in January.

The BOJ’s regional branch managers will next meet before the bank’s policy-setting meeting on Jan. 22-23.

Ueda has repeatedly said next year’s wage outlook was key to how soon the BOJ will exit ultra-loose monetary policy.

(Reporting by Leika Kihara; Editing by Hugh Lawson and Tomasz Janowski)