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TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda said Thursday that BOJ
policymakers do not have any rigid time limit in mind in their efforts to guide
low inflation to a stable 2% "at the earliest possible time" by persistently
continuing large-scale monetary easing.
He also told a seminar that the current positive growth cycle -- in which
higher corporate profits will create more jobs, push up wages and led to higher
inflation -- must be maintained to turn around the deflationary mindset among
firms and households that is "more deeply entrenched than expected."
"The bank has been conducting monetary policy while examining whether the
momentum toward 2% inflation is being maintained, taking into account
developments in economic activity and prices as well as financial conditions,"
"The bank has not set a specific deadline for achieving 2% inflation and
does not conduct monetary policy with such a deadline in mind."
When the BOJ began aggressive easing in April 2013, Kuroda declared that
the central bank would end constant price drops and achieve the 2% inflation
target in about two years by doubling the amount of cash available for economic
However, the plunge in crude oil prices in mid-2014 and a prolonged
consumption slump in Japan caused by the sales tax hike in April that year
pushed the annual inflation rate back down to zero from 1.5%.
This has led the BOJ to delay the estimated timing of achieving 2%
inflation six times through last year. The latest outlook was to hit the target
"around fiscal 2019" but at its April 26-27 meeting, the BOJ board decided to
stop publishing its estimate on when it can achieve the 2% inflation target in
order to "dispel the misunderstanding" among some market participants that a
delayed timing would prompt the bank to conduct additional easing, Kuroda told
reporters after the meeting.
Other key points from his speech:
* The BOJ has not changed its basic assessment that prices have continued
to show relatively weak developments compared to the economic expansion and the
labor market tightening. But the momentum toward achieving the price stability
target of 2% is "firmly maintained."
* It is important for the mechanism -- actual price increases lead to a
rise in longer-term inflation expectations -- to operate "more clearly" toward
achieving the 2% price target.
* There is a certain time lag before actual inflation affects inflation
expectations and the length of this lag is "highly uncertain."
* In response to questions, Kuroda repeated his recent remarks that
discussing at this point the specifics of how to eventually reduce the degree of
easing "would confuse the markets."
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