TOKYO (Reuters) – Taro Aso, outgoing Japanese finance minister, said on Monday that he proposed lowering the Central Bank’s 2% inflation target when prices were shaken by the sharp drop in the value of oil between 2014 and 2015.
Aso, who headed the ministry for nearly nine months, said the fall in oil prices was one of the main impediments for the government to declare the end of deflation.
“I proposed to President Kuroda that with oil prices falling so much, it would be difficult to achieve 2% inflation and that the target should be lowered at some point,” Aso said at his latest press conference as finance minister in reference to head of the Bank of Japan, Haruhiko Kuroda.
“But the president said he would do his best to reach the target,” Aso explained, adding that monetary policy makers need to “debrief at some point” why the central bank’s 2% inflation target was not met.
The comments highlight how government and lawmakers distanced themselves from the bank’s target years ago, despite central bank assurances that achieving it was possible while maintaining or increasing stimulus.
Aso became deeply involved in negotiations with the Japanese central bank when the latter, under political pressure to take a firmer stance against deflation, reluctantly set a 2% inflation target in January 2013 under then-President Masaaki Shirakawa.
(By Takaya Yamaguchi and Leika Kihara)
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