A Bank of Japan board member suggested Wednesday that the achievement of the central bank's 2 percent inflation target may be delayed given the impact on prices of the recently strengthened yen and slack consumption.
The BOJ aims to attain the inflation goal around the first half of fiscal 2017, after tumbling crude oil prices and other factors forced it to push back the time frame from the second half of fiscal 2016.
Speaking at a press conference in Yamaguchi Prefecture, western Japan, BOJ policymaker Yutaka Harada said the yen's appreciation, which pushes down the cost of imports, and sluggish domestic consumption and production can negatively affect price growth.
Still, Harada said the underlying trend of rising prices remains intact in Japan, adding, "It is possible to achieve" the inflation target.
The BOJ is facing difficulty in boosting inflation, currently hovering at around zero percent. As the central bank is scheduled to hold a policy-setting meeting in late April, attention is focused on whether it will take additional monetary easing steps.
In January, the BOJ decided to launch a negative rate policy in a surprise move designed to encourage bank lending and corporate spending. It is also intended to work positively for households.
In his speech delivered at a meeting of business leaders in Shimonoseki earlier in the day, Harada said Japan's economy is expected to recover steadily, but the BOJ should not hesitate to carry out additional monetary easing should risks to the economy materialize.
He cited as risks a further slowdown in emerging economies and an "unexpected shock" in global financial markets stemming from developments in the U.S. economy and the guiding of monetary policy in the country.
"This policy with a negative interest rate has been exerting its intended effects," Harada said, adding that more time will be needed to gauge the impact of it on the economy.
He voted in favor of adopting the new policy at the January meeting.
==Kyodo
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Source: Equities.com News
(April 12, 2016 - 11:42 PM EDT)
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