July 24, 2012 / 9:21 AM / 7 years ago

New BOJ board member: may need new easing approach on deflation

TOKYO, July 24 (Reuters) - The Bank of Japan will need to flexibly consider a new easing approach if current steps are deemed insufficient to beat deflation, a top economist newly appointed to the central bank’s policy board said on Tuesday.

Takahide Kiuchi, chief economist at Nomura Securities and one of two new board members whose appointments were formally approved earlier in the day, said uncertainty remains high on when the BOJ can achieve its inflation target of 1 percent, given current sluggish price moves.

The other new board member, Takehiro Sato, chief economist at Morgan Stanley MUFG Securities, said in a joint news conference it would be hard to expect the consumer price index to achieve the BOJ’s targeted 1 percent gain by next year.

He said it was necessary to cut real interest rates and raise inflation expectations.

As prominent economists, both Sato and Kiuchi have frequently called on the BOJ to take more aggressive steps to beat deflation, which has stifled the economy for much of the past two decades. That has led some market players to believe they may tip the board more in favour of bolder monetary easing steps.

Both will attend their first policy-setting meeting on Aug. 8-9.

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