summarize the following:

Bank of Japan Governor Kazuo Ueda suggested it’s possible to start normalizing monetary policy if the BOJ became confident in a pick-up in inflation for next year.

For now, underlying inflation remains below 2%, and the BOJ’s outlook is for price increases to slow toward the end of the year, Ueda said Wednesday — without specifying whether he was talking about the fiscal year that ends next March.

“From there on, we are forecasting some increase in the rate of inflation into ’24 — but, we are less confident about the second part,” he said at the European Central Bank’s annual retreat in the Portuguese hilltop resort of Sintra. “If we become reasonably sure that the second part is going to happen, that could be a good reason for a policy change.” 

He noted that the BOJ’s most recent set of forecasts penciled in 2% inflation for the 2024 fiscal year. While the consumer price index has been rising more than 3% lately — “which is well above the 2% inflation target — we think underlying inflation is still a bit lower than 2%,” he said. “That’s why we are keeping policy unchanged at the moment.”

Speaking alongside counterparts from the US, the euro zone and the UK, the recently appointed BOJ chief highlighted the continuing policy divergence from global counterparts — who cited the strength of underlying inflation as a reason to keep tightening.
The yen weakened to a seven-month low this week, prompting warnings from government officials, and forcing Ueda to tread a delicate line in his journey toward attaining the BOJ’s stable inflation target. 
“The yen is being influenced by many factors other than our monetary policy, including the policies of these three banks,” the Japanese governor said, when asked about the currency. “So we will see. We will monitor the situation very closely.”

In his first major public panel discussion overseas with his counterparts, Ueda surprised observers by cracking jokes — including suggesting that Japan’s plan to unveil a new set of banknotes next year could boost public confidence in the BOJ. The panel ended with the governor quipping that he hadn’t realized he had to attend so many press conferences and travel so much as BOJ chief.

Ueda has repeatedly stressed the high cost of premature tightening as green shoots finally emerge to generate sustainable inflation. With his more dovish stance than expected, the governor has made BOJ watchers push back their policy forecast after taking the central bank’s helm in April.

Asked about the outlook for consumer prices, Ueda reiterated the BOJ’s most recent forecasts. He observed that consumers’ views are changing, but not yet enough. 

“We are seeing that inflation expectations are rising, but as I said not to the extent that we are full in the 2% inflation expectations equilibrium,” he said. Ueda also said that the BOJ’s outlook is for the inflation path “to go down for a while, toward the end of this year, on declines in import prices” that spill over to domestic prices.

The central bank is widely expected to raise its projection at its next meeting on July 27-28 when about a third of surveyed economists forecast a policy change. They expect the bank to cite a brighter inflation outlook as a reason behind that shift.