OITA – A Bank of Japan policymaker said Thursday the central bank must “avoid any misunderstanding” in financial markets over its 2 percent inflation goal, underscoring that it is not pursuing higher prices without economic improvement.
“What the price stability target aims to achieve is not a situation in which only prices will rise,” Takehiro Sato, a member of the BOJ Policy Board, said at a meeting with business leaders in Oita Prefecture.
“Do not believe that the bank has been solely pursuing a pick-up in prices without due attention to the economy,” Sato said, adding that any higher inflation must come together with “higher wages,” which the BOJ has no ability or mandate to influence.
The price goal does not require “surgical precision,” Sato said. Rather “it presents a flexible policy framework in which some degree of latitude — both upside and downside — should be accommodated.”
He also made note of the national labor shortage, referring to the economic recovery led mainly by the service sector, where productivity is lower than in the manufacturing industry.