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Ex-Bank of Japan chief was skeptical about 2 percent inflation target in 2012

This photo taken Dec. 20, 2012, shows then Bank of Japan Governor Masaaki Shirakawa holding a press conference at the BOJ's head office. (Kyodo)

TOKYO (Kyodo) -- Former Bank of Japan Governor Masaaki Shirakawa expressed concern at a policy meeting in 2012 about the central bank's possible adoption of a 2 percent inflation target, shortly before the goal was enshrined in a joint statement with the government, minutes showed Tuesday.

    "Is it really achievable in a decent amount of time?" Shirakawa was quoted as saying at the BOJ's policy meeting in December 2012. The inflation target was subsequently adopted in a joint statement with the government led by then premier Shinzo Abe, known for his "Abenomics" economy-boosting program.

    The newly disclosed minutes of the bank's policy meetings between July and December of that year show how skeptical Shirakawa was about the effectiveness and prospect of achieving the target that remains elusive for Japan a decade after its introduction in 2013.

    The BOJ faced increasing pressure at the time to do more to beat deflation and address the yen's appreciation, including by easing its monetary policy further. Under Abe, the BOJ vowed to achieve the 2 percent inflation target "at the earliest possible time."

    "Failure to attain (an inflation target) will hurt the credibility of the central bank and be a minus for the economy," Shirakawa was quoted as saying at the BOJ's Dec. 20 meeting. "It goes beyond the issue of how serious and motivated we are and concerns how we are going to achieve (the target) with specific policy steps."

    To support the ailing economy, the BOJ had been stepping up government bond purchases even before Haruhiko Kuroda, the current governor, announced a series of monetary easing steps after he took the post, weakening the yen and lifting Japanese share prices.

    "Once fiscal discipline is lost, this will have an adverse effect on (efforts to ensure) price stability," Shirakawa said at the time, adding it is a "very serious" issue that should be recognized by the government and ordinary people, according to the BOJ.

    Then-Deputy Governor Hirohide Yamaguchi said the central bank had been aggressively taking monetary easing steps "with a strong determination," but that "the public has not necessarily seen us that way." He is seen as one of the candidates now to succeed Kuroda as BOJ chief.

    The central bank releases fuller minutes of policy meetings a decade after being held.

    The BOJ's monetary easing was a key pillar of Abenomics. Kuroda, whose current term as BOJ chief ends in April, has repeatedly stressed the need to keep its monetary policy accommodative until more robust wage growth helps stably attain the 2 percent inflation target.

    Still, the central bank's aggressive buying of assets, ranging from government bonds and exchange-traded funds, has caused its balance sheet to swell. BOJ watchers see a formidable challenge for the central bank when it decides to normalize its policy.

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