BoJ Confident on Inflation Rise and Eventual End of QE

Bank of Japan board member Takehiro Sato said on Thursday the central bank can be flexible on the timing of an eventual exit from its monetary easing, a sign that simply reaching its 2 percent price stability goal will not trigger immediate action.

Sato also said he is confident that consumer prices can continue to rise as improvements in the output gap have a lagging impact on prices.

The central banker also stressed that the BOJ’s economic forecasts anticipate volatile swings in demand caused by a scheduled increase in the sales tax, suggesting he sees little need to adjust policy in the short term.

“If the BOJ can judge that 2 percent will be sustainably achieved, it is possible to exit our policy before inflation actually reaches that level,” Sato said after giving a speech to financial professionals.

“The BOJ can also continue quantitative easing after 2 percent inflation is reached if it judges that the gains are not sustainable.”

The BOJ last week maintained its pledge of increasing base money, its key monetary policy gauge, at an annual pace of 60-70 trillion yen ($589 billion-$687 billion).

via Reuters

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