The Bank of Japan can abandon its 2 percent inflation target or suspend efforts to achieve it once the job market is tight enough because the public is better off having prices fall, not rise, an economic advisor to Prime Minister Shinzo Abe said.
While inflation is stuck near 1 percent, the BOJ's ultra-loose monetary policy is going well as it created jobs and boosted wages for temporary workers, said Koichi Hamada, who is considered as among the key architects of the premier's "Abenomics" stimulus policies.
"Prices don't need to rise much. From the perspective of people's livelihood, what's more desirable is for prices to fall, not rise," Hamada told Reuters on Friday.
On the BOJ's elusive 2 percent inflation target, Hamada said "I think it can be abandoned. It isn't absolutely crucial." He added that the "appropriate target level of inflation can be decided by the central bank."
The remarks highlight the shift in public sentiment towards the BOJ's radical monetary experiment begun by Governor Haruhiko Kuroda in 2013 as among the three pillars of Abenomics.
At the start, Kuroda pledged to achieve 2 percent inflation in roughly two years with a huge dose of monetary stimulus to end two decades of grinding deflation and economic stagnation.