Government officials attending the Bank of Japan’s February meeting dropped their calls to hit its inflation target “at the earliest date possible,” signaling to the central bank that it shouldn’t rush in accelerating inflation. BOJ Governor Haruhiko Kuroda has stuck to his view the central bank will to meet its 2 percent inflation target around the year beginning in April, even if it meant expanding an already massive stimulus program further.
But the government is becoming worried that further easing could send the yen to damagingly low levels and hurt household spending by raising the cost of living, undermining its attempts to re-energize the economy. At the BOJ’s policy meeting in February, two government representatives – one from the Finance Ministry and another from the Cabinet Office – both said they hoped the central bank would hit its inflation target “taking into account economic and price developments,” minutes of the meeting showed on Friday.
Up till January, the Finance Ministry representative had said the government hoped the target would be met “at the earliest date possible,” identical to the language the BOJ usually uses. The change in tone underlines a growing gap between the BOJ’s persistence in meeting its self-imposed deadline for hitting its price goal, and the government’s more relaxed approach over the timeframe.
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