Finance Minister Masajuro Shiokawa expressed caution Sunday about adopting a strict inflation target that would set a time frame for achieving a certain price level.
“It is difficult to say, ‘We will achieve this by a certain time.’ If it is decided, for example, to raise prices by 2 percent within a year, it would cause a strain in policies,” Shiokawa said on a television program.
“There would be side effects,” he said.
Bank of Japan Gov. Masaru Hayami has repeatedly opposed the idea of adopting an inflation target, but other key figures disagree with him. Some Cabinet ministers and high-profile ruling coalition lawmakers, however, have called on the central bank to adopt the policy to fight persistent deflation.
Shiokawa said the government is still trying to fight deflation, and that one goal is to raise overall prices to 1997 levels.
“We want to raise (price levels) a little . . . It would be desirable to raise them to the levels of 1997, and that should be the focus of policies,” he said later in the day on a separate TV talk show.
Shiokawa said he hopes the BOJ will ease credit policy further to make that possible. He said a move toward a weakening of the yen could also help.
“We want to see monetary policy eased further, and we plan to aggressively utilize policies that would promote the depreciation of the yen,” Shiokawa said.
“We will not do this to the point of causing international friction, but pursuing a yen depreciation trend is an option,” he said.
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