Bank of Japan's Shirai says inflation target must be more convincing

NEW YORK Fri Feb 28, 2014 3:43pm EST

A pedestrian holding an umbrella walks on a street covered by snow near the Bank of Japan building in Tokyo February 15, 2014. REUTERS/Yuya Shino

A pedestrian holding an umbrella walks on a street covered by snow near the Bank of Japan building in Tokyo February 15, 2014.

Credit: Reuters/Yuya Shino

NEW YORK (Reuters) - The Bank of Japan must try harder to convince the public it can spur faster price increases, a Japanese central banker said in a speech that acknowledged it could be some time before the institution achieves its inflation goal.

"The Bank needs to increase its dialogue with the public to promote understanding of the importance of the 2 percent target," Sayuri Shirai, a member of the Bank of Japan's policy board, said at a monetary policy conference on Friday.

Japan is engaged in a monumental campaign to revitalize an economy plagued by years of stagnant growth and falling prices. The Japanese central bank is playing a pivotal role in the effort, engaging in massive money printing in a bid to reverse the nation's deflationary mindset.

Shirai said it could take some time to get inflation to 2 percent. "It is possible that it may take even longer to achieve a situation where the 2 percent target is maintained in a stable manner," she said.

She said there have been some signs that the public is adopting higher expectations for inflation, which would be a major accomplishment for the central bank, but that some of the increase was due to the impact of a looming tax hike.

This means the Bank of Japan has work to do to convince the public that it will spur higher inflation.

"Maybe some people still have some doubt about our commitment," Shirai said during a panel discussion following her remarks.

(Reporting by Jason Lange; Editing by James Dalgleish and Chizu Nomiyama)

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