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BOJ should be flexible in achieving 2% inflation target: Aso

Finance Minister Taro Aso (Kyodo)

TOKYO (Kyodo) -- Finance Minister Taro Aso on Tuesday said the Bank of Japan should take a "flexible" approach in achieving its 2 percent inflation target.

"Is there any ordinary person who is angry that inflation isn't at 2 percent yet? I don't think so," Aso said during a session of the House of Councillors' Financial Affairs Committee. "I think that because (the BOJ) set it as the target in the beginning, they feel like they have no choice but to continue aiming for it."

Aso's remarks come ahead of a BOJ policy meeting later this week at which board members will discuss economic conditions and whether momentum toward the inflation target remains intact.

"It wouldn't be out of the question (for the BOJ) to take a more flexible approach," he said.

In January 2013, the government of Prime Minister Shinzo Abe and the BOJ announced that they would aim for 2 percent inflation in order to beat growth-stunting deflation.

In April of that year, the central bank under Governor Haruhiko Kuroda introduced an unprecedented money printing program to make good on that pledge in around two years.

But slow wage gains and weak consumption have kept prices from rising as fast as the BOJ had expected, and core consumer prices are currently increasing less than 1 percent on year. The central bank extended the time frame six times before abandoning it altogether, and now does not expect to achieve the target until at least fiscal 2021.

Takahide Kiuchi, executive economist at Nomura Research Institute and a former member of the BOJ board, said he believes the government no longer places much weight on the target and it should be repositioned as a mid- to long-term goal.

At the two-day meeting through Friday, board members are expected to maintain the current policy framework of ultralow interest rates and asset purchases, though weakening exports mean they could take a more cautious tone on the economy.

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