BOJ’s Ueda says unstable markets, uncertainty require vigilance

By Leika Kihara

(Reuters) – Bank of Japan Governor Kazuo Ueda said on Wednesday the central bank must be vigilant to fallout from unstable markets and global economic uncertainties for the time being, highlighting its focus on underpinning a fragile economic recovery.

Ueda reiterated the BOJ’s view that Japan’s economy will sustain a moderate recovery and help underlying inflation converge towards the central bank’s 2% target in the coming years.

But he did not repeat the central bank’s recent pledge to keep raising interest rates if inflation moves in line with its forecast, and instead stressed his focus on various risks.

“Uncertainty regarding Japan’s economy and prices remain high,” Ueda said in a speech to an annual securities industry meeting.

“The outlook for overseas economies, including that of the U.S., remains uncertain, while financial market are still unstable,” he said. “For the time being, we will scrutinise such developments with extremely high vigilance.”

Ueda’s remarks came after Prime Minister Shigeru Ishiba on Tuesday urged the BOJ to maintain loose monetary policy as the government focused on pulling Japan’s economy out of stagnation.