Por Kaori Kaneko y Tetsushi Kajimoto
TOKYO, Oct 14 (Reuters) – The Bank of Japan does not need to alter its 2% inflation target, as reaching it would help create the kind of society Japan wants with stable prices, Economy Minister Daishiro Yamagiwa said. disregarding speculations that the elusive target could be changed.
The government and the central bank issued a joint statement in January 2013 in which the entity, under political pressure to take a firmer stance against deflation, set an inflation target of 2%.
However, despite years of money printing and massive fiscal spending, Japan has struggled to raise inflation to 2%, sparking speculation among some investors that the monetary authorities could be forced to modify the joint statement.
In fact, former Finance Minister Taro Aso said he proposed lowering the inflation target when oil prices plummeted in 2014 and 2015, citing it as one of the main reasons the government could not declare an end to the deflation.
“At this stage there is no need to change the joint statement. GDP has been expanding steadily over the nine years of Abenomics,” Yamagiwa said, referring to the reflationary economic policy of former Prime Minister Shinzo Abe.
Yamagiwa may attend BOJ policy reviews as a representative of the Cabinet Office. Government representatives cannot vote on BOJ decisions, but they can express their opinions and delay voting.
Yamagiwa also told a group of journalists in an interview that he has no intention for now to alter the goal of achieving a primary budget surplus in the fiscal year through March 2026.
The government wants to assess how much the economy can grow while living with the coronavirus and then adopt its stimulus measures and growth strategy to get Japan back on the path of expansion, he said. “Fiscal discipline and the goal of a primary (budgetary) balance are important,” he said.
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