TOKYO: Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank would stick to monetary easing to support the economy for the present and in order to achieve sustainable and stable inflation accompanied by wage growth in the future.

“We are at a stage where we will continue monetary easing to firmly back economic activity at present,” Kuroda told a meeting with business leaders in Nagoya in central Japan.

Unlike the United States and Europe – which are tightening monetary policy to combat rising inflation – Japan is still only halfway to recovery from impact of the COVID pandemic, with the output gap remaining in negative territory, Kuroda said.

The BOJ maintained ultra-low interest rates at its last policy meeting in October, keeping its dovish guidance intact.

Kuroda said Japan’s consumer inflation would accelerate to around 3% this fiscal year but slow to around 1.5% next year as global commodity prices decline, reducing cost-push inflation inflationary pressures from import costs.

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He said, however, that there remained a large element of uncertainty over the outlook for Japan’s economy, currency moves, global commodity markets and other price pressures.

Japanese firms have long been wary about raising prices but were now making broad increases in prices, he added.

“We must pay attention to the price-setting mechanism at companies,” Kuroda said.