Bank of Japan Gov. Masaru Hayami said Tuesday that the central bank's zero interest rate policy has almost the same effect as inflation targeting, indirectly rejecting the idea that the bank set an inflation target to further ease monetary policy.
Hayami's comment, made in a regular news conference, follows recent remarks made by economists both within and outside the BOJ suggesting the bank adopt an inflation target as an alternative to its current policy of steering overnight interest rates down to zero.
Critics have argued that the nine-month-old policy is no longer relevant since overnight rates have been almost zero for months, and have called on the bank to adopt a new policy to achieve monetary easing.
But Hayami was cool to the idea of an inflation-targeting policy, citing technical difficulties such as which price indexes to target and how to interpret their statistical biases.
"The Bank of Japan has said it will maintain the zero interest rate policy until the threat of deflation disappears," Hayami said. "This, in fact, is a policy that extracts the merits of inflation targeting without delving into the difficult issue of setting a numerical target."