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TOKYO: Japanese Prime Minister Fumio Kishida said the central bank’s monetary policy is aimed at achieving its 2% inflation target, not at manipulating currency rates, brushing aside the view the country must end an ultra-low interest rate policy to stem sharp yen declines.

Kishida also said the recent rise in domestic inflation was due mostly to a global spike in crude oil and raw material costs, rather than the weak yen.

“The Bank of Japan (BOJ) is conducting monetary policy to achieve its 2% inflation target, not to manipulate currency rates,” Kishida told parliament, when asked by an opposition lawmaker about the relationship between the yen’s declines and the central bank’ prolonged ultra-loose policy.

“The government hopes the BOJ continues to strive toward achieving its inflation target, with an eye on economic, price and financial developments,” he said on Friday.

The yen slumped to a fresh 20-year low of 126.56 against the dollar on Friday, as investors focused on the gap between the US Federal Reserve’s aggressive rate hike plans and the BOJ’s pledge to maintain its ultra-low policy for the time being.

While a weak yen boosts Japanese exports, it inflates import costs for energy and food products that have already seen prices jump due to the war in Ukraine.

BOJ stands its ground on benchmark yield as global rates pressure builds

Some lawmakers have blamed the BOJ’s ultra-easy policy for accelerating yen declines and adding pain to households and firms by pushing up living costs.

Under a policy dubbed yield curve control, the BOJ pledges to guide short-term rates at -0.1% and cap long-term borrowing costs around 0% to fire up inflation to its 2% target.

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