Japan’s outgoing finance minister pushes for inflation target cut

On Monday, Japan’s outgoing finance minister, Taro Aso shared that he suggested the central bank slash its 2% inflation target. This came as the oil price slump from 2014 to 2015 took its toll on prices.

Aso said the oil price slump was one of the factors behind the government’s reluctance to officially end deflation.

The minister said he told Bank of Japan (BOJ) chief Haruhiko Kuroda that it would be difficult to reach the inflation target given the current oil situation. However, Kuroda responded by saying he would do his best to achieve the central bank’s goal.

Aso added that policymakers should at some point question why the BOJ’s 2% target has not been achieved.

The BOJ hesitantly set a 2% inflation target in January 2013 under former BOJ Governor Masaaki Shirakawa after being pressured for a stronger stand against deflation.

Upon assuming his post, Kuroda arranged a huge asset-buying program in April 2013 to pull Japan out of deflation. However, this move and Kuroda’s other efforts failed to push up inflation.