IMF welcomes Bank of Japan setting inflation target

Mar. 10--WASHINGTON -- The International Monetary Fund welcomed the Bank of Japan's decision Thursday to set an inflation target in lifting its five-year-old super-loose quantitative monetary policy and called for "fair" communications to tame prices.

"We welcome the Bank of Japan's indication that longer-term inflation objective will help steer the conduct of monetary policy going forward," Thomas Dawson, director of the IMF External Relations Department, told a press conference.

The IMF spokesman said the BOJ's move was "well anticipated," and stressed that "fair communication is going to be critical to guide expectations" of prices "in this transition to a post-deflation environment." Dawson said the IMF believes the BOJ will maintain its "expansionary policy for now" to keep interest rates close to zero "for some time to come." Overnight in Tokyo, the BOJ decided to end the ultra easy quantitative monetary policy and return to a conventional interest-rate target.

The BOJ also introduced an inflation reference rate with a range of zero to 2 percent as a new policy framework to seek price stability in the medium and long term.

Source: Kyodo News International (Japan), Mar 10, 2006