TOKYO: Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank’s top priority was to support the economy by maintaining its “powerful” monetary stimulus.

Unlike its US and European counterparts, the BOJ does not face a trade-off between the need to tame inflation and support the economy, as Japan’s inflation remains modest and driven by temporary factors like rising raw material costs, Kuroda said.

“Japan is absolutely not in a situation that warrants monetary tightening, as the economy is still in the midst of recovering from the pandemic’s impact,” Kuroda said in a speech.

Japan’s consumer inflation must achieve 2% on average, not in a temporary way driven by cost-push factors such as surging fuel and raw material costs, Kuroda said.

BOJ Kuroda highlights inflation as risk to Japan’s economy

“For inflation to stably accelerate toward 2%, wage and price growth must mutually rise in a positive cycle,” he said. “The BOJ will be unwavering in its stance of maintaining powerful monetary easing, so that recent changes such as a rise in inflation expectations lead to sustainable price growth,” he said.