BOJ may be behind the curve on inflation risk, government council member says
"In the past, we used to debate whether inflation would reach the BOJ's 2% inflation target or not. But now, inflation is above 2%," the member told a meeting of the council, according to a government official who attended the meeting and briefed reporters.
"I'm worried that monetary policy is already behind the curve," the member was quoted as saying, adding that prolonged price rises were already affecting people's livelihood and their inflation expectations.
Another private sector member said Japan must now undertake policies to stabilise inflation around 2% unlike in the past, when it focused on accelerating price growth to that level.
"I respect the projections made by the BOJ and Cabinet Office that inflation will eventually stabilise and slow below 2%. But elevated inflation affects the public by pushing down real wages," the member was quoted as saying.
The remarks underscore a growing concern held by business and academic circles over persistent price rises, which have kept inflation above the BOJ's 2% target for over three years.
The BOJ exited a decade-long stimulus last year and raised its short-term policy rate to 0.5% in January, based on the view Japan was on the cusp of durably achieving its 2% inflation target.
But it has held rates steady since then and signalled its intention to tread carefully in raising borrowing costs, on the view that recent inflation was driven largely by supply shocks, rather than robust demand.
The government's top economic council consists of the prime minister and key cabinet ministers such as the finance minister, as well as BOJ Governor Kazuo Ueda.
There are also four private sector members including Takeshi Niinami, head of beverage maker Suntory Holdings, and BNP Paribas strategist Mana Nakazora.
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