The Bank of Japan should stop trying to keep policy normalization speculation at bay by offering an inflation outlook that doesn’t reflect reality, according to one of the country’s leading experts on prices.
While the central bank sharply raised its price outlook last month, it was still kept too low, said Tsutomu Watanabe, an economics professor at the University of Tokyo. That move was likely due to concerns over fueling speculation that the BOJ will change its negative interest rate, he said in an interview on Monday.
"You’re going to deviate hugely from the right course of action if you try to justify policy with projections that aren’t true,” Watanabe said. "The correct path is to explain properly, if you want to prevent the figures from misguiding the policy outlook.”