Japan economics minister says premature for BOJ to consider QE exit
TOKYO (Reuters) - Japanese Economics Minister Akira Amari said on Friday it was premature for the Bank of Japan to consider an exit strategy from its massive stimulus program as the economy has only just begun emerging from 15 years of grinding deflation.
On whether the BOJ should consider easing monetary policy further, Amari said that was a decision the central bank ought to make based on whether Japan's economy was heading towards the bank's 2 percent inflation target on schedule.
"The BOJ has expressed strong determination that it won't hesitate to take further action if (the timing for meeting the target) is not on schedule," Amari said in an interview at a Reuters Newsmaker event.
"If the BOJ judges that it's not on schedule, I think the central bank will decide on its own (to act)," he said.
Amari said that while consumer inflation is accelerating steadily, it is too early to formally declare that Japan is sustainably out of deflation.
"The BOJ is striving to achieve 2 percent inflation in roughly two years. We can't declare that deflation has been eradicated unless inflation stays at that level and there are assurances it won't ease (back to deflation) even if the economy is hit by some external shocks," Amari said.
Many private economists do not expect inflation will reach such a level within the BOJ's target timeframe.
The central bank has stood pat since deploying an intense burst of monetary stimulus in April last year, when it pledged to double base money via aggressive asset purchases to accelerate inflation to 2 percent in roughly two years. It is expected to hold policy steady at its rate review next week.
With consumer inflation having exceeded the half-way mark of the price target, some market players are starting to think the BOJ's next policy move could be a withdrawal, not an expansion, of its quantitative easing (QE) program.
(Additional reporting by Yuko Yoshikawa and Yonggi Kang; Editing by Edmund Klamann & Kim Coghill)