By By Leika Kihara
NAGASAKI, Japan (Reuters) -Bank of Japan (BOJ) board member Asahi Noguchi said on Thursday the central bank must patiently maintain loose monetary policy as it will take time to eradicate the public’s view that prices are not set to rise much in the future.
With inflation exceeding the BOJ’s 2% target for more than two years and nominal wages rising, Japanese firms are becoming more keen to pass on higher costs through price hikes, he said.
But sluggish real consumption suggests households still take it for granted that prices won’t rise much, after having experienced two decades of deflation, said Noguchi, a dovish board member who voted against the BOJ’s decision to raise rates in July.
“It will take considerable time for such sentiment to dampen, and for society as a whole to shift to a mindset consistent with the BOJ’s 2% inflation target,” Noguchi said in a speech to business leaders in the southern Japanese city of Nagasaki.
“Till then, what’s most important is for the BOJ to patiently maintain accommodative monetary environment,” he said.