[TOKYO] Bank of Japan board member Yutaka Harada said the central bank can hold off on expanding stimulus further even if inflation does not hit the 2 per cent target by the first half of next fiscal year, the Sankei newspaper reported on Friday.
With inflation having ground to a halt on slumping oil costs and weak domestic demand, the BOJ pushed back the timing for meeting its ambitious price target in April and now expects inflation to hit 2 per cent around the first half of fiscal 2016 that ends in March 2017. "If we can see that inflation is approaching 2 per cent, I don't think we need to step on the accelerator further," Mr Harada said in an interview with the Sankei daily published on Friday.
Inflation will accelerate from around autumn this year and as long as the broad price trend keeps improving due to improvements in the economy, there is no need to ease again, he added.
If the BOJ were to act again, one option could be to cut a 0.1 per cent interest the central bank pays to excess reserves financial institutions park in BOJ accounts, Mr Harada said.
Cutting the interest, which serves as a floor for money market rates, could stimulate the economy by nudging banks into investing and lending more rather than keeping huge cash piles unused in BOJ accounts, he said.