Bank of Japan chief Kazuo Ueda said Thursday he is still not confident the nation can attain the central bank's 2 percent inflation target on the back of wage growth, amid growing speculation the BOJ is nearing a decision to scale back its powerful monetary easing policy.

Speaking at a press conference after a two-day meeting of Group of 20 finance chiefs, Ueda said the outcome of the forthcoming spring pay negotiations will be "a focal point" and stressed the need for strong wage growth to see if a virtuous cycle of price and pay hikes has been set in motion.

The comments came hours after Hajime Takata, another member of the BOJ's Policy Board, said the attainment of the 2 percent goal is "finally in sight" and the central bank should "shift gears" from monetary easing.

Bank of Japan Governor Kazuo Ueda holds a press conference in Sao Paulo on Feb. 29, 2024. (Kyodo)

Financial markets have been speculating that the BOJ will move away from powerful monetary easing aimed at ending Japan's years of deflation and abolish its negative interest rate policy this spring.

"As to the question of whether we are in a situation where we can foresee the inflation target as attained sustainably and stably, in my view, we are not there yet," Ueda said.

"We will continue our work to see whether a virtuous cycle of wages and prices is in motion or is beginning to strengthen. The 'shunto' wage talks are one of the focal points in that work," the governor said.

The annual labor-management wage negotiations have been under way in Japan, with most firms expected to release their results in March.

Economists expect the outcome to show that the upward momentum for wages seen last year has continued or has increased, at a time when Japan has seen elevated inflation, largely due to higher import costs of energy and other raw materials.

Still, inflation continues to slow, with core consumer prices rising 2.0 percent in January from a year ago, matching the BOJ's target.

Ueda, who previously expressed growing confidence about the likelihood of the inflation target being stably and sustainably attained, said last week that Japan is "in a state of inflation, not deflation."

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