BOJ Harada: Japan Labor Shortage Not Enough Yet To Boost Wages

--If BOJ Maintains Policy, Japan Economy To Grow, Boosting Wages and Prices

     FUKUSHIMA, Japan (MNI) - Labor shortages in Japan are not serious enough

yet to boost wage and prices but if the Bank of Japan maintains its current

large-scale monetary easing program, it should raise economic growth and lead to

higher wages and prices, BOJ board member Yutaka Harada said Thursday. 

     He also told business leaders in Fukushima City, northeastern Japan, that

the central bank may incur losses when it eventually exits from its aggressive

easing but added that the losses would not cause a major blow to the economy.

     The former government economist also repeated the bank's official line that

targeting an inflation rate below the 2% level the BOJ considers a global

standard among major central banks would cause the yen to appreciate and so have

a negative impact on firms.

     Harada said he is often questioned why wages and prices have not risen

despite labor shortages.

     "My answer is simply that labor shortages have been insufficient. If

current monetary policy is maintained, labor shortages will intensify further as

the economy improves, and there will be a phase in which both wages and prices

increase," he said, without projecting exactly when this is likely to happen.

     "If their momentum is strong enough, the bank will start reducing the level

of monetary easing," he said.

     "Some argue that there will be dangers associated with an exit from

monetary easing as the bank heads toward reducing the level of monetary easing,

but as I have explained, there are no such dangers."

     In October, weak price data prompted the BOJ policy board to lower its

projections for consumer prices in fiscal 2017 and 2018, but the BOJ stuck to

its estimate that it could achieve its 2% inflation target "around fiscal 2019"

ending in March 2020.

     That estimate had been delayed by one year in July, the sixth delay in the

inflation target date since the BOJ began its very accommodative easing policy

in 2013.

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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