The Bank of Japan is “very likely” to achieve its inflation target of 2 percent thanks to improving economic conditions, a key Policy Board member claimed Wednesday.
But Ryuzo Miyao was not specific on the timing of achieving the target, set by the BOJ as “in or around fiscal 2015,” saying it could be “either earlier or later to some extent.”
Miyao said price rises seen in the latter half of 2014, taking into account the consumption tax hike last April, may have been perceived as only an increase in costs, inciting further concern over the delay in economic recovery and a deterioration in sentiment.
But the fundamentals of Japan’s economy have been “improving steadily,” he said, citing such developments as higher employee income and the labor force participation rate, as well as the BOJ’s “ultra-easy” monetary easing policy.
“As a result, upward pressure on price and wage inflation rates as a trend is likely to increase,” Miyao said, expressing expectation for a continued increase in wages and prices if the upward trend is taken into account in spring wage talks.
“With economic fundamentals improving steadily, it is crucial that people spend, invest and distribute money, keeping the economy moving by circulating money rather than keep money in reserve,” he said.
Miyao will end his five-year term as a BOJ Policy Board member on March 25. He will be replaced by Waseda University economics professor Yutaka Harada.
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