IMF says BOJ inflation target likely to take more than two years

TOKYO Wed Jan 22, 2014 11:59pm EST

Naoyuki Shinohara, the deputy managing director of the International Monetary Fund (IMF), speaks during an interview with Reuters in Colombo November 18, 2013. REUTERS/Dinuka Liyanawatte

Naoyuki Shinohara, the deputy managing director of the International Monetary Fund (IMF), speaks during an interview with Reuters in Colombo November 18, 2013.

Credit: Reuters/Dinuka Liyanawatte

TOKYO (Reuters) - Japan's economy is showing promising signs in reaching the central bank's 2 percent inflation goal, but it is likely to take longer than the two-year timeframe that the central bank is targeting, a senior International Monetary Fund official said on Thursday.

As long as progress is being made, there is no need for the Bank of Japan to expand its quantitative easing program, under which it buys government debt and risk assets, Deputy Managing Director Naoyuki Shinohara said at a seminar in Tokyo.

Once inflation expectations are anchored around the BOJ's 2 percent inflation target, the central bank will need to communicate clearly about its exit strategy to avoid market turmoil, Shinohara said, according to the text of a speech.

(Reporting by Stanley White; Editing by Dominic Lau)

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