Kuroda rules out rate hike until wages rise more

Haruhiko Kuroda, governor of the Bank of Japan, said Friday that wage growth of 3% could bring the inflation of 2% closer. It’s a bank’s target.

According to Kuroda, the rise in inflation in Japan to 3.6% can be characterized as relatively small. He hopes that within the next fiscal year the level will be less than 2%. However, it’s noted that the rate of 3.6% is the highest in the last 40 years.

Speaking to parliament, Kuroda stressed that the future of Japan's economy is unclear at the moment. Therefore, the Bank of Japan must stick to a looser monetary policy until wages are raised to the necessary level.

Kuroda also pointed out that tough measures, such as raising interest rates, can only hurt the economy. He added that such measures cannot be ruled out completely, but they don’t fit well with the current economic and price developments in Japan.