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BOJ's Kuroda says wages, prices still weak despite stable real economy

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BOJ's Kuroda says wages, prices still weak despite stable real economy

Bank of Japan Governor Haruhiko Kuroda said Japan's wages and prices remained weak even as the real economy was on a solid footing, Reuters reported.

Kuroda, who spoke before parliament on Feb. 28, said real wage growth was lagging behind improving labor productivity.

Latest government data showed real wages in Japan in December 2017 fell 0.5% year over year, the largest decline in five months, complicating the central bank's aim of achieving its 2% inflation target. Core consumer prices rose an annual 0.9% in January, still well below the target.

Given that the BOJ's inflation target remains elusive, board member Goushi Kataoka cautioned against a premature exit from BOJ's aggressive monetary easing as he reiterated his call to ramp up stimulus, Reuters reported March 1.

Speaking before business leaders in Okayama in western Japan, he said, "The inflation environment in Japan differs substantially from that in the U.S. and major countries in Europe. I believe that, in Japan, there is still a long way to go before considering a change in monetary policy stance."

Kataoka is the sole dissenter to the central bank's decisions to keep monetary policy steady, arguing for a more aggressive policy to achieve the bank's 2% inflation target by March 2020.

Kuroda, however, maintains that when the BOJ begins normalizing monetary policy, it will be a "very gradual" process. Kuroda cited the U.S. Federal Reserve as an example of a central bank slowly exiting from quantitative easing and normalizing monetary policy while remaining vigilant to risks to the outlook.