MNI BRIEF: Upside Price Risks Exist - BOJ's Adachi

Bank of Japan board member Seiji Adachi said on Wednesday that the BOJ must monitor the upside risks to prices, but should prepare for prices to fall soon after.

Adachi told business leaders in Kagoshima City that that the y/y rise in the “flexible” consumer price index may not fall in line with the BOJ's estimate on the back of persistent "sticky" inflation. The y/y rise of Japan’s inflation rate is faster than initially expected and the deflationary mindset, or the view that prices will not rise, seems to be changing, he said.

“Compared with the past moves, Japan seems to be approaching the realisation of price stability target,” he added. However, it is premature for the BOJ to adjust easy policy as there is high uncertainty over the baseline price scenario, Adachi noted. The downside risks to the U.S. economy if materialised will have a large impact on Japan, he continued.