The Bank of Japan should dial back its massive stimulus before inflation hits its 2 percent target, a leading candidate to become the next governor said, raising questions about the efficacy of the BOJ's radical approach to snuff out deflation in the world's third-largest economy.
Former BOJ Deputy Governor Kazumasa Iwata criticized the central bank's price forecasts as too optimistic and warned that even hitting 1 percent inflation could be challenging given a recent batch of weak price data.
"The BOJ should slow its annual bond buying to around 40 trillion yen ($362 billion) from the current 80 trillion yen. That would make its policy more sustainable," Iwata told Reuters on Monday, calling on the bank to proceed with a slowdown in its bond buying that is already underway.
Iwata's views on monetary policy are closely watched as he is considered by markets as among the few strong contenders to replace Governor Haruhiko Kuroda when his five-year term ends in April.
Reference: ฺReuters
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