The Bank of Japan may see conditions fall in place to begin debating a new strategy for hitting its price target around the end of this year, as the economy shakes off the blues from the COVID-19 pandemic, its board member Asahi Noguchi told Reuters.
Even so, the central bank can hold off on expanding stimulus unless a shock event derails Japan's economic recovery, Noguchi, known as a vocal advocate of aggressive monetary easing, said in his first interview since joining the board in April.
"Once vaccinations proceed and the economy normalises, we'll see pent-up demand emerge quite a bit as households tap savings accumulated during lock-down measures," Noguchi said.
"There's a lot of uncertainty due to the new COVID-19 variant. But if all goes smoothly, we may be able to begin debate (on firing up inflation) at the end of this year through next year."
The remarks are the first from a policymaker specifying the timing at which the BOJ could shift its focus away from dealing with the pandemic's immediate blow, and back to the longer-term issue of how to address low inflation.
By keeping interest rates low and flooding markets with cash via asset purchases, the BOJ hopes to prod firms and households into spending more. A pick-up in consumption would allow firms to raise prices and wages, thereby helping prop up inflation.