TOKYO (Reuters) - Bank of Japan Governor Haruhiko Kuroda said he had no plans to take a fresh look into why the central bank has failed to meet its inflation target, suggesting that no major changes will be made to its massive stimulus program for the time being.
Kuroda, who was reappointed by the government for another five-year term when his current one ends in April, has been under fire by some lawmakers for failing to achieve his 2 percent inflation target despite years of heavy money printing.
Speaking in parliament, Kuroda dismissed a proposal by an opposition lawmaker that the BOJ conduct a thorough assessment on why its price target remains elusive and whether improvements ought to be made in its policy framework.
“It’s unfortunate that achievement of our price target has been delayed. But thanks to the effect of our powerful monetary easing, Japan’s economy is no longer in a state that can be described as deflation,” Kuroda said on Monday.
“Things are proceeding smoothly, so I don’t have any plan at this stage to conduct another comprehensive review,” he said, pointing to a steady recovery in the economy.
Kuroda’s remarks underscore the reluctance shared within the BOJ on conducting another comprehensive assessment like that in 2016, which could trigger debate on whether the bank’s framework needs tweaking and possibly spark another bout of global financial market volatility.
Kuroda reiterated the BOJ’s resolve to maintain its massive monetary stimulus with inflation distant from its target.
Mandated by premier Shinzo Abe to eradicate deflation, Kuroda deployed a massive asset-buying program in 2013 with a pledge to achieve 2 percent inflation in roughly two years.
But subdued inflation forced the BOJ to conduct a comprehensive assessment of its policy in 2016 that blamed slumping oil costs and Japan’s sticky deflationary mindset for delaying achievement of its price target.
Having conceded it will take more time than expected to meet its price goal, the BOJ also revamped its policy framework in 2016 to one targeting interest rates from the pace of money printing - a move it said will make its policy more suited for a long-term battle to drive up prices.
Japan’s economy expanded at an annualized 0.5 percent in October-December, posting its longest continuous expansion since the 1980s boom, thanks to robust capital spending.
But core consumer inflation stood at 0.9 percent in January, well below the BOJ’s target, in a sign the strengthening economy has yet to prompt companies to raise prices.
Despite weak price growth, many BOJ policymakers are wary of ramping up stimulus and prefer to maintain the status quo due to their dwindling policy options and the rising costs of prolonged easing.
Reporting by Leika Kihara and Stanley White; Editing by Chris Gallagher and Kim Coghill