TOKYO (Businesshala) – Japan’s outgoing finance minister, Taro Aso, said on Monday he had proposed lowering the central bank’s 2% inflation target at a time when prices were hit by a slump in oil prices from 2014 to 2015.
Esso, who was finance minister for nearly nine years, said the fall in oil prices was one of the main reasons the government could not officially announce an end to deflation.
“I proposed to Governor Kuroda that with oil prices falling so low, 2% inflation would be difficult to achieve, and the target should be lowered at some point,” Aso told the bank at his last news conference as finance minister. Referring to. Japan (BOJ) chief Haruhiko Kuroda.
“But the governor said he would do his best to achieve the target,” Aso said, adding that policymakers should “examine at some point” why the BOJ’s inflation target of 2% has not been met.
The remarks highlight how the government and lawmakers distanced themselves from the BoJ target years ago, despite assurances from the central bank that it was possible to achieve the target by maintaining or increasing the stimulus.
Aso was deeply involved in negotiations with the BOJ when the central bank – under political pressure to take a firm stand against deflation – reluctantly set a 2% inflation target in January 2013 under former BOJ governor Masaki Shirakawa.
After Kuroda took over as governor, he deployed a massive asset-buying program in April 2013 to lift Japan out of deflation. But the money wall and many additional easy steps since then have failed to prop up inflation.
While Aso supported the BoJ’s stimulus efforts as a member of the cabinet, he has repeatedly expressed doubts that monetary policy alone can lift the economy out of recession.
New Prime Minister Fumio Kishida is set to form a cabinet later on Monday, with the finance ministerial position expected to go to Aso’s brother-in-law, Shunichi Suzuki.