BoJ board member Yutaka Harada warned that the economy is facing increasing risks, including slowdown in China, trade tensions and weak private consumptions. Also, subdued inflation could reinforce the public view of low inflation, which would delay the achievement of the 2% target. He urged that “if the economy deteriorates to the extent that achieving the inflation target in the long term becomes difficult, it’s necessary to strengthen monetary easing without delay.”
For now, Harada said BOJ should commit to loose monetary policy “unless prices show stronger movements than currently anticipated.” And the conduct of monetary policy should be “data-dependent, not calendar-based”. He also warned that “past episodes of premature monetary tightening worsened the economy, driven down prices and output, and led to declines in interest rates in the longer-term.”
