Economy

US president Joe Biden will allow solar panel parts to be imported free of tariffs from four south-east Asian nations, offering a cost reprieve to US renewable energy project developers after months of uncertainty. The move by the White House was part of a package of measures designed to boost a transition to clean energy, including triggering the Defense Production Act — a Korean war-era law — to spur the domestic production of solar panel components. The temporary blocking of trade barriers for imported solar panel components from Cambodia, Malaysia, Thailand and Vietnam comes amid a heated debate within the US administration over whether to ease tariffs on billions of dollars of Chinese goods to fight inflation, unravelling levies imposed under former President Donald Trump. Biden’s decision will “temporarily” allow US solar developers to source modules and cells from the four south-east Asian countries, “by providing that those components can be imported free of certain duties for 24 months”, the White House said. The move effectively blunts the threat of a US commerce department investigation that might lead to much higher tariffs on some imported solar panel components. The probe was supported by some domestic solar photovoltaic equipment producers, but strongly opposed by clean-energy developers and other industry supporters who said it was having a “chilling” effect on the sector and could derail the Biden administration’s efforts to green the country’s electricity grid.In May, energy consultancy Rystad Energy said up to 17.5 gigawatts of planned solar installations in 2022 — or almost two-thirds of the total — were in jeopardy because of the commerce department’s investigation.Heather Zichal, head of the American Clean Power Association, said Biden’s announcement would “rejuvenate the US’s domestic solar industry, which Commerce’s flawed inquiry has disrupted”.The commerce department launched the anti-dumping investigation in March after a complaint from Auxin Solar, a small, California-based solar panel manufacturer, which argued Chinese manufacturers were dodging tariffs on their exports to the US by completing the panels in south-east Asia. Mamun Rashid, Auxin chief executive, said Biden’s move on Monday interfered with the commerce department’s quasi-judicial process. “By taking this unprecedented — and potentially illegal — action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of US trade law,” Rashid added. Panels from Cambodia, Malaysia, Thailand and Vietnam accounted for 85 per cent of all solar power capacity imported to the US last year, and 99 per cent in the first two months of 2022, according to Rystad Energy. Analysts at ClearView Energy Partners, a Washington consultancy, said that they still thought the commerce department was “likely” to rule in favour of the complaint, and they “would not be surprised to see litigation directed against the waiver”.Analysts have cautioned that reliance on imported solar panels, critical minerals, metals and parts for offshore wind turbines could leave the US exposed to political and supply chain risks in exporter countries, especially in China, where forced labour has been used to make renewable energy components in Xinjiang. But other renewable developers have complained that the administration’s efforts to break that dependency by creating domestic supply chains threaten to slow clean energy deployment and compromise Washington’s target of fully decarbonising US electricity by 2035. The White House sought to balance the easing of tariffs on imported solar panels with the use of the DPA to boost domestic manufacturing of components and shift supply chains in the sector back to the US. The invocation of the law — which Biden used recently to boost domestic supply of critical minerals — will also apply to building insulation, heat pumps, equipment for making clean-electricity fuels and transformers for the power grid, the White House said. More

Capital has labour’s back, apparently. Investors with assets of £3.8tn between them, including Legal & General and Nest, want J Sainsbury to pay workers a “real living wage”. Shareholders will vote on the demand, currently for £11.05 per hour in London and £9.90 outside it, at the UK supermarket chain’s annual meeting.The moral case for increasing hourly pay during a cost of living crisis is clear. ShareAction, the body leading the campaign, counts Christian Aid and CAFOD among its members. The business case is less obvious. The UK, like much of the rich world, sets minimum wages (confusingly called, for those aged 23 and over, the “national living wage”). This is currently £9.50 an hour. The UK wants to lift this to the equivalent of two-thirds of the median wage come 2024. That would push the UK towards the top of the class like Portugal and New Zealand, which both reached that level in 2020. Yet activists say that is not an adequate living wage — the right to which was set down over a century ago in the Treaty of Versailles. The “real living wage” would reflect a varying basket of goods and services closely matching typical living expenses. More than 10,600 employers — including Chelsea Football Club, whose star player Romelu Lukaku earns a fortune — are on board. Some 300,000 employees are beneficiaries, to the tune of around £1.8bn since the campaign began in 2001.Supermarkets are understandable holdouts. They operate on razor-thin margins and spend heavily on staff; 12 per cent of Sainsbury’s revenues goes on payroll. There is no hard evidence to show higher pay improves productivity. That applies to C-suites as well as shop floors, though surveys point to improved morale, staff retention and recruitment. Wage increases bring a swift and highly transparent day of reckoning. Sainsbury’s last year lifted its payroll by 16 per cent, to £3.75bn, while clipping shareholders’ cut by 6 per cent. If capital backs higher pay for labour anyway, companies will find it very hard to resist. More

The writer, incoming Professor of Practice at Georgetown University, is a former deputy research director at the IMFThe human suffering wrought by Sri Lanka’s recent debt default is a tragedy. Sri Lankans unable to get access to life-saving medicines, food, water or fuel show the human dimension of financial problems. But the tragedy is not restricted to one country. There is a serious risk it could prove to be much more widespread, given the proportion (nearly 60 per cent) of the world’s poorest countries that are already classified as being in debt distress or at high risk of it. And debt service burdens in middle-income countries are also worrying — even before one factors in the spillovers from higher US interest rates. These will tighten financial conditions globally, and thereby raise the odds of default in emerging market economies with unhedged balance sheets, lagging economic recoveries and shorter-maturity public debt.The international community has called for much greater transparency about the extent of the liabilities of over-extended sovereign borrowers, in order to assess and contain the risks of protracted and disorderly defaults. But as important as greater debt transparency is, there is a separate problem that has received much less attention: the need for accurate forecasts of the evolution of public debt over time. To set interest rates, the US Federal Reserve needs to know not just how high inflation is today, but also how it is likely to develop. Similarly, governments and the international community need to have both an accurate measure of public debt and an unbiased forecast of its future path if they are to be able to plan policy and to develop robust fiscal strategies consistent with debt sustainability. Unfortunately, the reliability of public debt forecasts, particularly for emerging and developing countries, is seriously wanting.This finding comes from a recent study of the accuracy of public debt forecasts published by the official and private sectors. Such forecasts proved to be biased. That is, projected debt over a five-year horizon was lower on average than the ultimate reality. The forecasts by the official and private sectors were equally biased, and the bias for emerging and developing countries was unrelated to the failure to anticipate recessions, which is a perennial problem in the business of projecting. In other words, the bias was systematic.Forecasts that are worth paying attention to should be unbiased. Sometimes the reality will be higher than the projection, sometimes lower. But an unbiased projection is one that is not, on average, on one side or the other of the reality. The bias is more severe in circumstances in which there is a particularly acute need for sobriety; that is, when there has been an increase in public debt and the projection is for the ratio of debt to gross domestic product to decline. Historically, projections of declining public debt are the ones that are particularly suspect, with a bias of about 11 per cent of GDP.A good compass is essential to know where you’re going. But in the realm of public debt forecasts, we lack such a reliable guide.Why is this a problem today? As the risk of sovereign defaults spreads, systematically optimistic public debt forecasts for emerging and developing countries are a serious issue. They may breed complacency and lead to inadequate planning, particularly when the historical bias is so large and chronic. Indeed, were the average bias of past years to be seen in today’s environment, many emerging or developing countries would find themselves with debt ratios that, rather than declining as projected over the next five years, would stabilise at, or rise to, levels that have traditionally signalled a crisis.There is an urgent need, therefore, to repair the compass and remove the bias in public debt forecasts. More

LONDON (Reuters) -Prime Minister Boris Johnson faced a confidence vote on Monday after a growing number of lawmakers in his Conservative Party questioned the British leader’s authority over what has been dubbed the “partygate” scandal.Johnson, who scored a sweeping election victory in 2019, has been under growing pressure after he and staff held alcohol-fuelled parties at the heart of power when Britain was under strict lockdowns to tackle the spread of COVID-19.Underlining the depth of anger, he was met with a chorus of jeers and boos – and some muted cheers – at events to celebrate the Platinum Jubilee of Queen Elizabeth in recent days.On Monday, the once seemingly unassailable Johnson was also lambasted by ally Jesse Norman, a former junior minister who said the 57-year-old prime minister staying in power insulted both the electorate and the party.”You have presided over a culture of casual law-breaking at 10 Downing Street in relation to COVID,” he said, adding the government had “a large majority, but no long-term plan”. Norman is one of a growing number of Conservative lawmakers to publicly say that Johnson has lost his authority to govern Britain, which is facing rising prices, the risk of recession and strike-inflicted travel chaos in the capital London.Jeremy Hunt, a former health minister who ran against Johnson for the leadership in 2019, said the party knew it was failing the country. “Today’s decision is change or lose,” he said. “I will be voting for change.”Johnson’s anti-corruption chief John Penrose resigned. “I think it’s over. It feels now like a question of when not if,” he told Sky News.A majority of the 359 Conservative lawmakers – at least 180 – would have to vote against Johnson for him to be removed – a level some Conservatives say might be difficult to reach, given the lack of an obvious successor.If passed, there would then be a leadership contest to decide his replacement, which could take several weeks.DRAWING A LINE? Graham Brady, chairman of the 1922 Committee that represents rank-and-file Conservative lawmakers, said a vote would be held between 6 p.m. and 8 p.m. (1700-1900 GMT) and the result would be announced later on Monday.A spokesperson for Johnson’s Downing Street office said the vote would “allow the government to draw a line and move on”.”The PM welcomes the opportunity to make his case to MPs (members of parliament) and will remind them that when they’re united and focused on the issues that matter to voters there is no more formidable political force.”Johnson, a former London mayor, rose to power at Westminster as the face of the Brexit campaign in a 2016 referendum, and took a hardline stance once in power.Jacob Rees-Mogg, Brexit opportunities minister, told Sky News that completing Britain’s departure from the European Union would be “significantly at risk without his drive and energy”.Johnson has locked horns with Brussels over Northern Ireland, raising the prospect of more barriers for British trade and alarming leaders in Ireland, Europe and the United States about risks to the province’s 1998 peace deal.OUTCOME UNCERTAINMinisters have also been at pains to point out what they describe as the highpoints of Johnson’s administration – saying Britain’s quick rollout of COVID-19 vaccinations and its response to Russia’s invasion of Ukraine proved the prime minister could take the “big decisions”.”I am backing him today and will continue to back him as we focus on growing the economy, tackling the cost of living and clearing the COVID backlogs,” finance minister Rishi Sunak said on Twitter (NYSE:TWTR) in a choreographed expression of support.In letters sent out to Conservative lawmakers, Johnson also made the same point, urging them to support him.Johnson, or his possible successor, face a raft of problems. British households are confronted by the biggest cost-of-living squeeze since records began in the 1950s, with food and fuel prices surging while wages lag.For some Conservatives, Johnson is guilty of squandering a large majority, unable or unwilling to set the agenda after becoming hamstrung by scandals.But others expect him to survive the vote, and although wounded, he could reset his administration and focus on what one party veteran described as “sounding and acting like a Conservative”.For those hopeful of replacing him, bookmaker Ladbrokes (LON:LCL) put Hunt, a former health and foreign minister, as its favourite, followed by foreign minister Liz Truss.For many in Britain, the revelations of what went on in Downing Street, including fights and alcohol-induced vomiting, when many people were prevented from saying goodbye to loved ones at funerals, were difficult to stomach. Mel Chetwood, a 61-year-old archivist, said the sight of Johnson being booed by a royal-supporting audience was key. “I thought that was so telling,” Chetwood said. “That felt like a turning point to me.” More

European shares and US stock futures rose on Monday after China loosened some Covid-19 restrictions, soothing markets that have been unsettled by concerns over global central bank rate rises to tackle persistently high inflation. The Stoxx Europe 600 share index added 0.9 per cent, but remained almost 9 per cent lower year to date because of the economic impact of Russia’s invasion of Ukraine and soaring consumer prices. London’s FTSE 100 added 1.2 per cent, with energy stocks rising after Saudi Arabia raised oil prices for Asian buyers. Germany’s Xetra Dax gained 1 per cent. Futures trading implied Wall Street’s S&P 500 would add 1.1 per cent at the New York open, after the blue-chip stock index fell for eight of the last nine weeks. Contracts tracking the technology-heavy Nasdaq 100 added 1.5 per cent.The S&P is down almost 14 per cent so far this year while the Nasdaq Composite has dropped 23 per cent, after inflation hit consumer-facing businesses and spurred the Federal Reserve to signal aggressive rate rises, along with plans to drain liquidity from the financial system via quantitative tightening. The market mood brightened on Monday, however, after Chinese state media said public transport and restaurant dining would reopen in Beijing, sparking hopes of an end to draconian lockdowns that have slowed the world’s second-largest economy and strained global supply chains. A contraction of China’s services sector also eased in May, a closely watched business activity survey showed on Monday. “For China to come out of [lockdowns]will make a big difference,” said Neil Birrell, chief investment officer at Premier Miton Investors. “It will also help stimulate global trade. “But in my view I don’t think we’ve hit the bottom” of the stock market downturn, he added. Data on Friday are expected to show that US inflation hit 8.3 per cent in May on an annual basis, according to a Reuters poll, in line with the previous month’s reading. But last week’s strong jobs data suggested “the Fed will continue to act,” by raising interest rates, Birrell said. The Fed’s main funds rate stands at 0.75 per cent, with money markets predicting a rise to 2.8 per cent by the end of the year. In currency markets, sterling gained 0.6 per cent against the dollar to less than $1.26 ahead of UK prime minister Boris Johnson facing a vote of no confidence in his leadership on Monday. The euro added 0.1 per cent to more than $1.07 ahead of this week’s European Central Bank meeting. The bank is widely expected to signal a plan to lift its main deposit rate, currently at minus 0.5 per cent, by a quarter point in July and return to positive borrowing costs in the eurozone by September. Italian government bonds firmed after the Financial Times reported the ECB would prop up weaker eurozone nations’ debt markets if they were hit by a sell-off driven by concerns about funding costs. The yield on Italy’s 10-year bond dropped 0.05 percentage points to 3.36 per cent as the price of the debt rose. This came after the gap between Italy and Germany’s 10-year bond yields — benchmarks for borrowing rates in the two nations — rose last week to its highest since early 2020. In Asia, mainland China’s CSI 300 share index added 1.9 per cent and Hong Kong’s Hang Seng rose 2.7 per cent. More

ORLANDO, Fla. (Reuters) -The European Central Bank appears committed to start raising interest rates next month, opening the door for hedge funds to load up on euros. And that is exactly what they are doing. U.S. futures market data shows speculators are holding their biggest net-long euro position in 12 weeks, and that May marked funds’ second-most positive month-on-month change in positioning in nearly two years. The latest Commodity Futures Trading Commission report shows that funds increased their net-long euro holdings by around $2 billion in the last week, accounting for two-thirds of a $3 billion fall in the broader long-dollar position against G10 currencies. Indeed, the $5 billion decline in the net-long dollar position against G10 currencies in the past two weeks is entirely due to a corresponding $5 billion jump in net-long euro positions.In the week to May 31, CFTC funds increased their net-long euro position to a three-month high of 52,272 contracts from the previous week’s 38,930. Their bet on the euro appreciating is now worth $7 billion, up from $5.2 billion a week earlier. A long position in an asset or security is effectively a bet that it will rise in value, and a short position is the opposite.ECB EYEING 50 BPS HIKE?The shift in ECB expectations has been remarkable. Only a month ago, CFTC funds held a small net-short euro position, the euro slumped as low as $1.0350 in mid-May, and talk of parity with the dollar was rife. But euro zone inflation continues to march higher – it hit a record 8.1% in May – and the debate is no longer whether the ECB will raise rates in July for the first time in over a decade, but by how much.Several ECB officials have floated the possibility of a 50 basis-point move, and Deutsche Bank (ETR:DBKGn) economists now expect one of two rate hikes in the third quarter to be a 50-bps hike, more likely in September than July. “We wonder why the ECB has not acted already,” Societe Generale (OTC:SCGLY) economists wrote on Friday.The ECB is expected to outline on Thursday the path toward a rate rise in July. Euro money markets are pricing in 100 bps of rate hikes by October and 125 bps by year-end, and the euro has rebounded to a one-month high close to $1.08. Foreign-exchange market participants are paying heed to the ECB’s inflation-fighting talk, and pushing to the back of mind the bank’s 2008 and 2011 rate hikes, which many analysts say were major policy errors. For now, at least, hedge funds are on board too. Related columns: Hedge funds position for U.S. growth slump, rates peak (May 23)Yellen could face G7 pressure on dollar (May 18)(The opinions expressed here are those of the author, a columnist for Reuters)(By Jamie McGeever in Orlando, Fla.Graphics by Jamie McGeever and Saikat ChatterjeeEditing by Matthew Lewis) More

Hello from Brussels for the last time in a while for Trade Secrets. Alan Beattie will be up and running in London next week. Among the policy innovations he will be able to appraise is the effect on trade of readopting imperial measurements (clue: not great) and the impact of trade facilitation deals with individual US states (clue: also not great). There may also be the start of a trade war with the EU as London seeks to disapply parts of its post-Brexit trade deal. I will focus on events in Brussels — well, Luxembourg and Strasbourg actually — as explained below. Charted waters looks at the problem for the UK of securing energy supplies into the winter.As ever, if you have any thoughts to share, you can contact Alan on [email protected] Brexit helped France get its way on trade rulesThe French presidency of the EU ends this month and Paris will be very satisfied with its work. On Thursday the European Parliament plenary meeting in Strasbourg is expected to vote for the International Procurement Instrument (IPI), which will limit non-EU companies’ access to the EU public procurement market if their governments do not offer EU companies similar access to their public tenders.France has backed the measure since it was introduced by the European Commission a decade ago. But it was repeatedly blocked by the UK and the Hanseatic League of liberal, northern free traders such as Sweden and the Baltics.That member states have agreed the procurement instrument shows how the mood in Brussels has shifted towards a more defensive trade posture. France argues that others will open their procurement markets to avoid being locked out by the EU. The earlier one-way openness was an example of how “naive” Brussels had been, argues French trade minister Franck Riester.As well as the IPI, Paris has advanced the anti-coercion instrument (ACI), which would allow the EU to hit back quickly against trade sanctions by a third country without going through the World Trade Organization; a carbon border tax, which will put tariffs on imports of steel and other goods where the producer is not paying a cost for emissions; an anti-subsidy instrument, which will ban foreign companies benefiting from state aid from buying EU rivals, and an emergency export control regime.Reister said the ACI measures would act as a deterrent to third countries fearing EU retaliation. He cited China’s recent ban on imports from Lithuania after Vilnius forged closer ties with Taiwan. Brussels has challenged the move at the WTO. But Riester said that if the ACI had been in place, Brussels could have retaliated swiftly with a similar block on Chinese goods, potentially persuading Beijing to hold back. “We want our trade policy to be more assertive,” Riester told the Financial Times, welcoming a “paradigm shift” in recent years. “We have decided to create some interesting new instruments.”The classic trade defence responses are anti-dumping, anti-subsidy and safeguard measures, or to take a complaint to the WTO, which takes at least a year, said Ferdi De Ville, an economics professor at the University of Ghent who is writing a paper on the subject.“For about 60 years the EU has used only three trade defence instruments to protect itself against unfair imports or a surge in imports. All of a sudden they are acquiring one unilateral instrument after another.”It is partly a response to Donald Trump’s US administration, which slapped tariffs on steel and aluminium on national security grounds, and the block on Lithuanian imports by China under President Xi Jinping.Brussels was finally prompted to toughen its stance last year, when US president Joe Biden invoked the Defense Production Act to restrict exports of vaccine ingredients in the midst of the Covid-19 pandemic. Thierry Breton, the EU’s internal market commissioner, threatened to withhold supplies of vaccines to the US unless it lifted its de facto ban. He said he needed a similar tool to the DPA — most recently used to increase production of baby formula and airlift supplies from Europe.“It is a new world — the balance of power,” Breton told the FT. The EU’s stance had moved from “open by default” to “open with conditions”, he said. “If the UK was still here it would have been difficult” to change, Breton admitted. The French commissioner’s team is now working on a Single Market Emergency Instrument, which would allow export restrictions on five or six categories of goods, such as raw materials, in an emergency. The commission has also proposed a similar system for microchips under its European Chips Act after the pandemic disrupted global supply chains. Member states in favour of open trade, such as Baltic and Scandinavian countries, confirm the British exit in 2020 has left them leaderless. “The French propose things and the Germans go along with it,” said one diplomat. “The British provided a counterweight before.”Several diplomats and officials said Breton in particular had grown in influence, buzzing with ideas for “strategic autonomy”. “He’s full of energy, like a footballer who gets the ball and runs the length of the pitch with players standing off him. Sometimes he gets stopped by a last-ditch tackle in the box, sometimes he scores,” said one.They point out that the EU is a global winner from trade, with an annual trade surplus in goods and services of £285.6bn in 2020. France has also been effective at preventing things. In the final trade ministers’ meeting of its presidency last Friday in Luxembourg free traders such as Finland and Sweden asked when trade deals with Chile, New Zealand, Mercosur and Mexico would finally be concluded and presented for adoption.Riester made clear such deals had to promote sustainable development, save the rainforest and improve labour conditions in those countries.An employee passes rolls of steel at the Salzgitter AG steel plant in Salzgitter, Germany © Rolf Schulten/BloombergReister also said “sensitive sectors” such as farming needed protection from cheap imports — the Chile deal would mean accepting more of its chicken.There is internal opposition to Breton’s policies. The commission’s trade and competition departments, which have long championed liberal ideas, have tried to water down several of the defensive measures, with limited success.Jonathan Hackenbroich, policy fellow of the European Council on Foreign Relations, sums up their arguments. An open economy ensures competition, improving company performance. “A strong network of deep trade relations facilitates diversification — avoiding the kind of excessive dependence that another power could leverage for economic coercion,” he added.It is a point constantly made by Valdis Dombrovskis, EU trade commissioner. After the trade ministers meeting he said: “We must seek a new consensus on how to advance our bilateral partnerships. Clearly business as usual is not an option. “We need to get over the finish line agreements which have already been negotiated like Chile, Mexico and Mercosur. These are important deals with large potential for generating mutual benefits. And we need to advance ongoing negotiations for new deals, notably New Zealand, Australia, Indonesia and India.”The Czech Republic takes over the presidency on July 1, followed by fellow open trader Sweden. Do readers think they will have any success getting trade deals done?Charted watersPresident Vladimir Putin’s use of energy exports as a weapon in his battle to conquer Ukraine has been obvious for many months. So it is understandable that the UK energy industry is expressing frustration that the country’s government is only now getting round to outlining methods of securing supply from domestic production.As my colleagues Nathalie Thomas and Jim Pickard note in their analysis over the weekend, there is concern that the government is underplaying the country’s reliance on Russian gas, which ministers say accounts for less than 4 per cent of supply. Official data show about 8 per cent of total gas imports in 2021 came from undersea pipelines, or interconnectors, from the EU. But as the bloc relies on Russia for 40 per cent of its own supply there could be knock-on effects on how much gas can be pumped to the UK. (Jonathan Moules)Trade links The future of electric car manufacturing is in China, contends Robin Harding in an opinion piece. China’s electric vehicle market share in the EU is already bigger than that of any country but Germany. Just like a Philips or a Sony television, well-known brands will continue but they will not be made in the Netherlands or Japan, he contends.The EU and US are looking to increase ties with Taiwan as relations with China sour. The island is already an important source of investment and high technology goods. Since Beijing considers Taiwan to be a part of its territory, full trade deals are off the cards. But the US launched a new trade initiative with Taiwan and the EU/Taiwan Trade and Investment Dialogue was upgraded last week as both sides sought close co-operation on silicon chips. The UK is preparing legislation to disapply parts of its post-Brexit trade deal with the EU, setting the scene for a possible trade war with Brussels. Prime minister Boris Johnson wants to do away with “pointless and bureaucratic” checks on goods going to Northern Ireland. The bill to do so is expected within the next couple of weeks.Trade Secrets is edited by Jonathan Moules More

TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank’s top priority was to support the economy, stressing an unwavering commitment to maintaining “powerful” monetary stimulus.Unlike its U.S. and European counterparts, the BOJ does not face a trade-off between the need to tame inflation and support the economy, as Japan’s inflation remains modest and driven by temporary factors such as rising raw material costs, Kuroda said.”Japan is absolutely not in a situation that warrants monetary tightening, as the economy is still in the midst of recovering from the pandemic’s impact,” Kuroda said in a speech.As Russia’s invasion of Ukraine pushes up raw material costs, Japanese households are becoming more accepting of higher price tags, Kuroda said, describing it as an “important change” from the perspective of meeting the BOJ’s price target.But Japan’s consumer inflation must achieve 2% on average, not in a temporary way driven by cost-push factors, Kuroda said.”For inflation to stably accelerate toward 2%, wage and price growth must mutually rise in a positive cycle,” he said.”The BOJ will be unwavering in its stance of maintaining powerful monetary easing, so that recent changes such as a rise in inflation expectations … lead to sustainable price growth,” he said.On recent yen moves, Kuroda repeated his view that currency rates should move stably reflecting economic fundamentals.While the yen’s decline hurts households and retailers by boosting import costs, it helps regional areas by attracting overseas tourists as Japan re-opens its borders, Kuroda said.”As long as the moves are stable and not very sharp, a weak yen in general is likely to have a positive impact on Japan’s economy,” Kuroda said.Japan’s core consumer prices in April rose 2.1% from a year earlier, exceeding the BOJ’s 2% target for the first time in seven years, due largely to rising fuel and food costs.BOJ officials have repeatedly stressed that such cost-push inflation will prove temporary and won’t prompt the central bank into tightening monetary policy. More