People walk in front of the bank of Japan building in Tokyo
People walk in front of the bank of Japan building in Tokyo, Japan, April 7, 2023. Reuters

The Bank of Japan will continue monetary easing to achieve its 2% inflation target accompanied by wage hikes in a sustainable and stable manner, new deputy governor Shinichi Uchida said on Wednesday.

The comment followed Ueda's view earlier that it was appropriate to maintain the central bank's ultra-loose monetary policy for now as inflation has yet to sustainably meet its 2% target.

Ueda's repeated pledge to stand pat on policy may dim any expectations for reversing the BOJ's easy money stance anytime soon, particularly when global markets remain jittery about the risk of contagion from U.S. and European banking sector troubles.

Uchida said Japanese financial institutions are equipped with sufficient capital and fund-raising bases, making any impact from Western banking problems since March "limited."

Uchida was reading a speech at an annual gathering of trust associations on behalf of Governor Kazuo Ueda, who is traveling to Washington to attend the International Monetary Fund (IMF) and World Bank group's spring meetings.

"The pace of price hikes is expected to slow towards the middle of this fiscal year due to government steps to curb energy prices and as the effects of companies passing on costs wane," Uchida said.

"The BOJ will continue with monetary easing so as to achieve the price stability target in a sustainable and stable manner, while supporting the economy together with wage hikes."

More Japanese households are expecting prices to rise a year from now, a BOJ quarterly survey showed on Wednesday, raising pressure on the central bank to adjust or ditch its yield curve control (YCC) policy.

The survey, closely scrutinised by the central bank to determine the outlook for inflation, showed that the ratio of Japanese households expecting prices to rise a year from now stood at 85.7% in March, up from 85.0% in December.

On Monday, Ueda also said the BOJ must avoid being too late in normalising policy, a sign that he would be open to tweaking the controversial policy that caps the 10-year bond yield around zero.