By Leika Kihara
TOKYO Bank of Japan board member Toyoaki Nakamura said on Thursday it was premature to tighten monetary policy as recent increases in inflation were mostly driven by higher import costs rather than wage gains.
"Sustainable, stable achievement of our 2% inflation isn't in sight yet. We therefore need more time before shifting to monetary tightening," Nakamura said in a speech to business leaders in the city of Gifu in central Japan.
Tightening monetary policy before rising prices are accompanied by higher wages would hurt domestic demand and corporate profits, Nakamura said, warning of uncertainty over the outlook for Japan's economic recovery.
"Close scrutiny of (economic) conditions and cautious decision-making are required when modifying monetary policy," he said, warning against shifting policy too hastily.
The remarks contrast with those of another board member Naoki Tamura, who said on Wednesday that Japan's inflation was "clearly in sight" of the central bank's target, suggesting there was no consensus within the nine-member board on how soon the BOJ can scale back its massive monetary stimulus.
Under its yield curve control, the BOJ guides short-term interest rates at minus 0.1% and the 10-year government bond yield around 0% to reflate economic growth and sustainably achieve its 2% inflation target.
(Reporting by Leika Kihara; Editing by Christian Schmollinger)
