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MNI BRIEF: BOJ Adachi Warns Tightening Policy Risks Deflation

(MNI) Tokyo
(MNI) TOKYO

Bank of Japan board member Seiji Adachi said on Wednesday that any delay in achieving the bank's price target or any policy response to address short-term forex moves would increase uncertainty around the outlook for monetary policy and would not be desirable for Japan’s economy.

Adachi, in a speech to business leaders in Toyama City, voiced concerns over any adjustment in policy towards a tightening phase , saying that negative impacts would increase the risk that Japan’s economy falls into deflation again.

“Downside risks to global economic and financial environment are increasing. There is high uncertainty over its impact on the foreign exchange rate,” he said.

Adachi added that monetary policy should be managed to move the underlying inflation rate to around 2% in a stable manner.

“Japan’s prices are rising but I cannot be confident of achieving the price target in a stable and sustainable manner as a rise in corporate growth expectations and sustainable wage hikes haven’t been ascertained,” Adachi said.

MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com
MNI Tokyo Bureau | +81 90-2175-0040 | hiroshi.inoue@marketnews.com

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