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BOJ will do something if economy forecloses on 2% inflation goal: Iwata

Kyodo

Bank of Japan Deputy Gov. Kikuo Iwata said Friday that the global economy has become weaker than expected and that the central bank intends to take other steps if its goal of stoking 2 percent inflation appears difficult.

“If it becomes difficult next year to attain 2 percent inflation in the medium to long term, we will take some kind of steps,” Iwata said during a question-and-answer session after delivering a speech in Tokyo. But he declined to specify what kind of measures he had in mind.

Iwata said a “downside risk” has emerged because the global economy is weaker than it projected it would be in April, when it launched radical monetary easing to double Japan’s monetary base and expanded its purchases of government bonds with the goal of artificially achieving 2 percent inflation in around two years.

Iwata, a strong proponent of aggressive monetary easing, vowed to keep its ultraloose monetary policy in place until the target is firmly attained.

Meanwhile, he said the Japanese economy is recovering in line with the bank’s expectations, citing higher stocks, rising prices and improving employment. But he also said it will take time for the radical policy to make an impact on the real economy.