According to Asahi Noguchi, a loose policy is required because Japan does not have the high rates of inflation that other countries do.
Asahi Noguchi, a member of the Bank of Japan’s (BOJ) board of directors, said on Thursday that the central bank must continue an ultra-easy monetary policy, even as growing commodity costs are projected to push inflation closer to the elusive 2% objective.
Raw material prices have risen as a result of the Ukraine conflict, but companies have failed to pass on the increased costs to customers due to low household spending, according to Noguchi.
While rising energy costs and the dissipation effect of previous cellular charge cuts may cause Japan’s core consumer inflation to reach 2% in April, the increase is definitely driven by external forces rather than a recovery in domestic demand, he added.
“Japan is not suffering the kind of high inflation that many other countries are experiencing,” Noguchi said in a speech, adding that authorities should continue to focus on eliminating deflation rather than lowering inflation.
“It will take significant time to attain our 2 percent inflation target and justify a removal of stimulus in a country currently entrenched in a sticky deflationary mindset,” he said.
Noguchi’s views are similar to those of BOJ Governor Haruhiko Kuroda, who has emphasized the bank’s determination to maintain ultra-loose monetary policy even while other major central banks consider exiting crisis-mode stimulus measures.
Source: Reuters
