THE Bank of Japan (BOJ) may have to pursue its aggressive monetary policy easing for “some time” to fully vanquish deflation, BOJ Governor Haruhiko Kuroda said Saturday.

    Speaking at a global central banking conference, Kuroda said the central bank’s efforts to overcome deflation by stimulating Japan’s economy with large-scale asset purchases was proving effective.

    He added, however, that the public was not yet convinced Japan’s central bank would hit its 2 percent inflation target. Creating that expectation was necessary to get firms to raise wages — a key step in Japan’s long war with deflation, he said.

    “We have committed ourselves to continuing the increasingly accommodative stance until the 2 percent inflation target is met and maintained in a sustainable manner,” Kuroda said. “That means inflation expectations are anchored to 2 percent ... [and] that may take some more time.”

    The BOJ deployed an intense burst of monetary stimulus last April, when it pledged to double its money base with a quantitative easing program of asset purchases. Kuroda wants to accelerate consumer inflation to 2 percent in roughly two years. Japan has been mired in 15 years of grinding deflation.

    The program was initially successful, with consumer inflation having recently hit 1.3 percent, excluding the impact of an April sales tax hike. Inflation is expected to slow in the coming months as the boost from a weak yen on import costs begins to fade.

    Speaking on a panel alongside central bankers from Brazil and Britain, Kuroda said public inflation expectations are moving up gradually, but are still low at around 1 percent.

    Low long-term interest rates will likely not rise until the 2 percent target is reached, he said, adding that the BOJ’s 2 percent inflation target, once met, could serve as a benchmark for wage negotiations.(SD-Agencies)