The Business Times

Inflation target timing not like 'train schedule' :BoJ deputy chief

Published Tue, Oct 28, 2014 · 10:16 AM

[TOKYO] The Bank of Japan's deputy governor said Tuesday the timeline for reaching its inflation target "can't be like a train schedule", remarks that may fuel doubts about the ambitious goal of conquering years of deflation.

The comments by Kikuo Iwata come as BoJ chief Haruhiko Kuroda remains upbeat on reaching the promised 2.0 per cent inflation - a cornerstone of Japan's attempt to revive the long-sluggish economy.

In April last year the central bank launched a massive monetary easing plan and rolled out the inflation target, saying it would be reached in "about two years".

The timeline is crucial for gauging future BoJ policy, such as whether the bank - which holds a policy meeting this week - will expand its stimulus to make up lost ground.

But Iwata told a parliamentary committee Tuesday that reaching the target was not as rigid as Japan's always-on-time train services.

"Monetary policy is aimed at influencing people's behaviour," he said.

"It can't be like a train schedule." Many observers say inflation is unlikely to reach two percent by the end of spring next year as initial price gains slow, and after an April sales tax rise slammed the brakes on growth in the world's number three economy.

"The BoJ is trying to obscure the definition of 'about two years'," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

"Mr Iwata said the time frame is the period between 2015 and 2016, and that the bank will achieve the goal as soon as possible during the period.

"This means that...two per cent inflation in strictly two years is difficult," he added.

But Mr Kumano said the remarks did not mean the goal was unachievable, and added that the BoJ may still hold off fresh easing after its meeting on Friday.

"Mr Iwata is saying a delay in achieving two percent inflation is okay because ultimately the target will be achieved," he said.

Japan is also due to release a slate of economic data Friday including inflation and unemployment figures.


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