By Leika Kihara

TOKYO, Reuters – Japan is not likely to experience inflation exceeding 2% as a target by the central bank, Haruhiko Kuroda, Bank of Japan Governor, said Thursday. This makes it a case for maintaining a very easy monetary policy.

This comment highlights the growing divergence between BOJ’s dovish position and U.S. Federal Reserve. The Fed raised interest rates Wednesday for the first-time since 2018. They also laid out plans to continue increasing borrowing costs.

Kuroda said that it will be more difficult to hit our target of inflation at 2%. He also stated that the parliament should not discuss details on exiting from an easy policy.

As the effects of cell phone fee reductions diminish, analysts expect Japan’s core consumer inflation to rise to 0.2% by April.

Recent increases in oil and commodity prices due to sanctions on Russia and war in Ukraine have added to inflationary pressures. This effect is likely to last for much of next year.

Kuroda, however played down the likelihood that inflation will reach 2% over time long enough for it to be worth withdrawing monetary stimuli.

He said that Japan was not in an environment where inflation would reach 2% even with the effects of cell phone fee reductions tapering off and rising energy prices.

Kuroda stated that the BOJ would consider ending its ultra-easy policies and revealing its plans if 2% inflation has been achieved.

He said, “We will do so to guide monetary policies to ensure that markets including Japanese government bonds are stable.”

It is common for the BOJ to maintain policy stability and warn against the Ukraine crisis at the end of its two-day meeting.