Japanese Economics Minister Akira Amari said on Tuesday he wants to hear what the Bank of Japan thinks about a sharp decline in oil prices and its impact on consumer prices, as the BOJ's 2 percent inflation goal becomes ever more difficult to reach.
With the collapse in oil prices unleashing deflationary pressures around the world, BOJ Governor Haruhiko Kuroda and other central bankers face the daunting task of explaining how they can hold off on expanding stimulus. A two-day meeting of the BOJ board ends on Wednesday.
"The BOJ is independent, so it is up to them to think for themselves and decide what to do," Amari said.
"Kuroda originally said he wanted to achieve his price target in around two years, so it depends on how you evaluate that."
The BOJ chief has repeatedly said there is a high chance of meeting the inflation target around fiscal 2015, which starts in April, but this could become less likely if oil prices fall further.
Oil has plunged by more than half since June 2014, pressured by a global supply glut and OPEC's refusal at its last meeting in November to cut its output.
The fall in oil prices is a boon for companies and households because it lowers fuel costs, but it has unleashed a wave of deflationary pressure that is pushing down prices in Japan and other major economies.
Less than three months ago, the BOJ justified its shock expansion of "quantitative and qualitative easing" (QQE) as aimed at preventing oil price falls, and a subsequent slowdown in consumer price rises, from weighing on inflation expectations.
The move has kept alive market speculation that the relentless drop in oil prices will force the BOJ to ease again in coming months.
At the two-day rate review ending on Wednesday, the BOJ is set to cut its core consumer inflation forecast for next fiscal year below 1.5 percent, from 1.7 percent projected in October, sources familiar with the bank's thinking said.
The BOJ may be able to leave policy unchanged if it focuses on the benefits of recently rising wages.
But a surprise increase of asset purchases under QQE cannot be ruled out if the BOJ board's median inflation forecast for next fiscal year falls below 1 percent, some analysts say.
Kuroda stunned financial markets in 2013 with a plan to buy up government debt to push inflation to 2 percent in around two years and put an end to Japan's 15-year battle with grinding deflation.
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