TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said on Wednesday that the pace of gains in consumer prices had accelerated slightly over the past year.
Kuroda said in a speech he expected rising wages to accompany gains in consumer prices.
He also said the central bank would continue with quantitative easing because consumer prices were still distant from the BOJ’s 2 percent inflation target.
The comments highlight the slow progress the BOJ has made so far in trying to achieve sustained inflation, which could eventually complicate monetary policy as Kuroda starts a second five-year term as governor.
“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,” Kuroda said in the text of the speech.
The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 1.0 percent in February from a year earlier, data showed last month.
However, a narrower measure that excludes fresh food and energy rose only 0.5 percent year-on-year, which some economists say shows inflationary pressure is not strong.
Kuroda, who was chosen by Prime Minister Shinzo Abe to launch an aggressive monetary easing program, began his second term as governor on Monday.
Kuroda said on Monday the central bank would eventually need to consider how to normalize policy, suggesting the priority of his next tenure could be to dial back a massive stimulus he deployed five years ago.
This task may not proceed smoothly and could sow confusion if consumer prices remain distant from the central bank’s price target, some economists say.
Reporting by Stanley White; Editing by Chang-Ran Kim and Sam Holmes