BoJ board member Seiji Adachi voiced support for continued monetary easing amid a climate of significant uncertainty regarding price outlook. Adachi relayed these views during a discussion with business leaders in Kagoshima.
Adachi said, “My view is that it’s appropriate to continue monetary easing with the yield curve control framework.” He added, “The shape of the yield curve has become smooth overall and there is improvement in market functioning.”
“Amid huge uncertainty over the price outlook, there are upside and downside risks. In the long run, however, the downside risks appear to be larger,” he warned. These risks, according to Adachi, must be carefully considered when deciding on changes to monetary policy.
Adachi also noted an interesting shift in public’s perception of inflation, suggesting that Japan’s long-standing deflationary mindset is starting to change. “We’re seeing some changes in the public’s deflationary mindset, or the perception that prices won’t rise,” he said.
“In a sense, we’re moving closer to achieving our price target. But there’s high uncertainty over our baseline inflation outlook, so it’s premature to tweak monetary policy,” Adachi concluded.
