BoJ's Yutaka Harada: Central Bank Should Continue Its Current Easing Policy In Order To Reach Inflation Target
Yutaka Harada (Bank of Japan policy board member) hit back at criticism of the central bank’s ultra-easy monetary policy, and emphasized that any immediate rate increases would only damage the financial sector. "If interest rates are actually hiked, that would lower bond and stock prices, hurt businesses through a rise in the yen, and increase credit costs, which would hit financial institutions hard," Harada said.
According to the politician, the central bank of Japan should continue its current easing policy, which is having its intended effects, in order to achieve its 2% inflation target. Further easing would be needed if inflation lost momentum. "To achieve the 2% price goal, the current jobless rate needs to fall further," Harada said. "That doesn't mean that we should continue monetary easing until the jobless rate hits 2% though."
It is awaited, that the Bank of Japan is likely to cut its price growth forecasts at a policy meeting ending on July 31 as long-term inflation expectations stall. Annual core consumer inflation, which includes oil products but excludes volatile fresh food costs, held steady at 0.7%in May, well below the BOJ's 2% target.