TOKYO (MNI) – Bank of Japan Governor Masaaki Shirakawa on Monday
renewed his pledge to maintain the BOJ’s monetary easing while also
repeating that the bank’s new explicit 1% inflation goal is similar in
nature to the Federal Reserve’s own 2% price target.

There is no gap between the government and the BOJ in forecasting a
modest recovery in growth and inflation, he told the lower house budget
committee.

Finance Minister Jun Azumi praised the BOJ’s move at the committee,
saying its new goal is supporting the bank’s intention of working on
public inflation and interest rate expectations with a clearer time
frame.

“In this sense, I believe they (the BOJ) have effectively set an
inflation target,” he said, while acknowledging that different people
have different definitions for inflation targeting.

Asked to comment on Azumi’s remarks, Shirakawa said he shared the
view with Azumi in terms of how the BOJ conducts monetary policy.

“What is clear is our policy stance — we are pushing ahead with
our powerful monetary easing until we see clear prospects for 1% (annual
inflation) for now,” he said.

The governor repeated this remarks made last week that the BOJ’s
price goal framework is similar to the Fed’s own longer-term inflation
goal adopted last month, adding that some economists call it price
targeting, which is denied by Federal Reserve Chairman Ben Bernanke.

On Friday, Shirakawa told reporters that there is no point in
strictly classifying whether or not a policy amounts to inflation
targeting because policy goals set by major central banks have been
converging on the longer-term achievement of sustained growth with price
stability, instead of focusing on short-term price swings.

At its latest meeting on Feb. 13-14, the BOJ policy board surprised
markets by boosting its already large-scale unconventional financial
asset buying program by a further Y10 trillion (all in JGBs) to Y65
trillion and adopting a more explicit 1% inflation “goal” while keeping
its practically zero interest rate policy unchanged.

Though the terms may have been tweaked, the BOJ’s goal of
longer-term annual price increases above zero and no more than 2% as
measured by the consumer price index remains unchanged.

tokyo@marketnews.com
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