BOJ policymakers signal higher threshold for further easing

The BOJ will not be proactively easing policy to achieve 2 per cent inflation quickly. It is moving toward a more flexible inflation target.

Tokyo

: Bank of Japan policymakers kept to their pledge to expand stimulus but only to protect the economy from external shocks, signalling that the threshold for further easing has been raised after last month's policy revamp.

BOJ Governor Haruhiko Kuroda made no direct reference of the need to achieve his inflation target quickly when he reiterated his readiness to cut interest rates or expand asset buying.

\"We are prepared to ease policy again, including lowering short-term rates, if we judge that the merits outweigh the costs,\" Kuroda told parliament on Wednesday.

Yutaka Harada, who has been among the most vocal advocates of aggressive money printing on the nine-member board, also said the BOJ would ease if \"sudden changes in the global economy\" threatened the price target.

Before last month's change in policy framework, BOJ officials have said they would not hesitate to ease if it would hasten achievement of their elusive price growth target.

\"It is clear from the change in the policy framework that the BOJ has essentially given up on a quick victory in achieving 2 percent inflation,\" said Hiroshi Shiraishi, senior economist at BNP Paribas Securities.

\"The BOJ will not be proactively easing policy to achieve 2 per cent inflation quickly. It is moving toward a more flexible inflation target,\" he said.

The comments by Kuroda and Harada came ahead of the BOJ's next review on Oct. 30-Nov. 1, when it may again push back the timing for achieving its price target in a quarterly review of its forecasts.

Only a handful of analysts polled by Reuters predicted the BOJ would ease at the next review, while about 70 per cent said it would act next year.

The BOJ last month switched its policy to target interest rates and away from expanding the monetary base - or the pace of money printing - after years of massive asset purchases failed to jolt the economy out of decades-long stagnation.