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Bank of Japan member stresses easy policy despite rising costs

Asahi Noguchi says loose policy needed as Japan is not experiencing high rates of inflation seen in other countries.

Bank of Japan (BOJ) board member Asahi Noguchi said on Thursday the central bank must maintain an ultra-easy monetary policy, even as rising commodity costs are expected to accelerate inflation towards its elusive 2 percent target.

The Ukraine crisis has pushed up raw material prices, though companies have struggled to pass on the higher cost to consumers due to weak household spending, Noguchi said.

While Japan’s core consumer inflation may exceed 2 percent from April on rising energy costs and the dissipating effect of past cellphone fee cuts, the increase is clearly driven by external factors rather than a recovery in domestic demand, he added.

“Japan is not experiencing the kind of high inflation seen in many other countries,” Noguchi said in a speech, adding that policymakers must continue to focus on ending deflation rather than curbing inflation.

“In a country still mired in a sticky deflationary mindset, it will take significant time to stably achieve our 2 percent inflation target and justify a withdrawal of stimulus,” he said.

Noguchi’s views echo those of BOJ Governor Haruhiko Kuroda, who has stressed the bank’s resolve to keep monetary policy ultra-loose even as other major central banks eye an exit from crisis-mode stimulus measures.

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