TOKYO : The Bank of Japan need not alter its 2per cent inflation target as achieving that would help create the kind of society Japan wants with stable prices, Economy Minister Daishiro Yamagiwa said, shrugging off speculation that the elusive target could be changed.
The government and central bank issued a joint statement in January 2013 in which the BOJ, under political pressure to take a stronger stand against grinding deflation, set itself a 2per cent inflation target.
Despite years of money printing and massive fiscal spending, Japan has struggled to lift inflation to 2per cent, however, raising speculation among some investors that policymakers may be forced to tweak the joint statement.
In fact, former finance minister Taro Aso said he had proposed lowering the inflation target when oil prices plunged in 2014 and 2015, citing it as one of the main reasons the government could not declare an end to deflation.
"At this stage, there's no need to change the joint statement. GDP has steadily expanded during nine years of Abenomics," Yamagiwa said, referring to former premier Shinzo Abe's reflationary economic policy.
Yamagiwa can attend BOJ policy reviews as a Cabinet Office representative. Government representatives can't vote on BOJ decisions but they can express their opinions and delay votes.
Yamagiwa also told a group of reporters in an interview that he has no intention for now of altering the aim of achieving a primary budget surplus in the fiscal year to March 2026.
The government wants to assess how much the economy can grow while living with corona and then adopt its stimulus measures and growth strategy to get Japan back on the path to expansion, he said. "Fiscal discipline and the goal of a primary (budget) balance are important."
"There's talk of making broader use of tax breaks on wage hikes and creating a scheme to raise wages for those who are engaged in unstable and low-paid jobs such as non-regular workers and freelancers," Yamagiwa said.
"To achieve this end, we will adopt economic measures and weave various items into a supplementary budget. We'll also tackle longer-term issues such as wage hikes for middle-class income earners."
(Reporting by Kaori Kaneko, Tetsushi Kajimoto; Editing by Toby Chopra and Hugh Lawson)