Japan policymakers defend BOJ, see no problem with slowing inflation

[TOKYO] Senior government officials on Friday insisted that Japan is on track to meet the central bank's price target, signalling that they see no problem with the recent slowdown in inflation blamed largely on slumping oil costs.

Finance Minister Taro Aso praised the Bank of Japan's monetary stimulus, which was launched two years ago, as having played a big part in changing the public's deflationary mindset.

Economics Minister Akira Amari also said consumer inflation is moving around 1 per cent when excluding the effect of oil price falls, suggesting that he saw no immediate need for the BOJ to expand monetary stimulus again. "It may be somewhat behind schedule, but this only shows how tough it is to end deflation that has plagued Japan for 15 years," Mr Amari told reporters after a cabinet meeting, referring to the BOJ's pledge to achieve its 2 per cent inflation target at or around the current business year ending in March 2016.

"For now, I think we can say prices are steadily rising (toward the 2 per cent target)," he said.

Asked whether the BOJ ought to ease policy again, Amari said only that the decision was up to the central bank to decide.

The BOJ has stood pat since expanding its "quantitative and qualitative easing" (QQE) programme in October last year to prevent falls in oil prices, and a subsequent slowdown in inflation, from delaying a sustained exit from deflation.

Kozo Yamamoto, among Prime Minister Shinzo Abe's economic aides, said on Wednesday that the BOJ must ease policy again on April 30, with the economy at a "standstill" and consumer inflation having ground to a halt.

However, some ruling party lawmakers are worried that additional monetary easing could trigger further falls in the yen that will push up import costs and hurt households.

REUTERS