His remark came amid growing speculation in financial markets that the BOJ could further loosen policy at its next policy meeting on October 30 to meet the inflation goal and conquer deflation.
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Japan’s core inflation probably slipped for a second month in September, while factory output fell for a third month in a row, a Reuters poll showed, adding to headaches facing Bank of Japan policymakers as they head into a key policy meeting on Friday.
While the central bank is set to cut its rosy price forecasts in a semi-annual report due out Friday, many BOJ officials prefer to hold off on expanding an already massive stimulus programme that has had limited success in accelerating inflation since being deployed two-and-half years ago. Although Kuroda has repeatedly said he sees prices rising again to meet the target next year, expectations are high for the bank to add to stimulus at its meeting next Friday.
With inflation having ground to a halt, the BOJ is likely to acknowledge that the timing for hitting its price goal will be delayed by several months from the current projection of around September next year.
Miyamae expects the BOJ to keep its policy unchanged at Friday’s meeting. Given that oil prices have halved since past year it is hard to boost prices, although cheaper oil is positive for resource-poor Japan, he said.
More efforts were needed to boost demand by encouraging companies to spend their cash piles on raising wages and workers’ disposable income, which should in turn help boost prices, Aso said. Therefore prices won’t rise.
“Aso’s comments suggest that he basically stands up for Kuroda and the Abe government isn’t pressing the BOJ to ease further at the moment”, said Hiroaki Muto, chief economist at Tokai Tokyo Research Center Co.in Tokyo.
Etsuro Honda, a leading economic adviser to Japanese Prime Minister Shinzo Abe, also said there was no need for the Bank of Japan to ease policy further now, the Kyodo news agency reported yesterday.
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Government sources have said Abe’s administration is also cautious, fearing the impact on of a too-soft yen on consumption.
