Kuroda shifted from aggressive policy to reach target inflation rate

On Friday at the BOJ meeting Haruhiko Kuroda noted that the bank maintains its 2% target inflation. It means he is reluctant to rush to hit the goal through additional stimulus.

"If prices alone increase, that wouldn't be good," said Kuroda. He added that achievement of target inflation rate without keeping economy in a balanced manner might cause a reversed effect. Kuroda noted that it was necessary to provide stable wage growth and corporate profits to achieve the target.

At a policy meeting the BOJ remained its monetary policy unchanged. However, the bank lowered inflation expectations for current fiscal year ending March and for fiscal 2016. The bank noted that these forecasts were subject to downside risks.

At September’s meeting Haruhiko Kuroda has already stated that achievement of target inflation rate wouldn’t be able without a stable wage growth. Elaborations at the last meeting suggest that the governor shifted from approach to reach target rate aggressively. According to his words, the problem is ‘sensitive’ and additional easing measures, if undertaken now, may be excessive.

Kuroda revealed a common opinion that monetary easing alone wouldn’t lead to a positive result. Weaker yen caused growth of prices on food, but consumer spending decreased along the way. Major reason is lackluster wage growth. Besides, the BOJ has no opportunity to directly affect wages.