Photo/Illutration Members of a Reiwa Rincho panel announce their proposals on fiscal policy at a news conference on Jan. 30. (Yuki Kubota)

An expert panel is calling for the Bank of Japan to reconsider the controversial ultra-loose monetary policy it has pursued for the past decade.

It wants a review of the 2013 joint statement issued by the government and central bank underpinning the strategy, which calls for achieving a 2-percent inflation rate as soon as possible.

Japan had failed to reach that target up until last year, when consumer prices began to surge in the wake of the Russian invasion of Ukraine.

The panel is part of Reiwa Rincho, a council established in June 2022, which has about 100 members from corporate management, labor and academia to study ways to reform society.

With BOJ Governor Haruhiko Kuroda’s term set to end in April, markets are watching for any clues about whether the bank may be ready to shift its long-held position. Changing the statement would send a clear signal that it is.

The central bank has suppressed interest rates through large-volume purchases of government bonds while the government expanded its spending to deal with a range of issues, including the novel coronavirus pandemic, according to the panel’s Jan. 30 proposal.

But because of this, the private sector became used to a “lukewarm environment” that delayed the meaningful reforms needed for an economic growth strategy, it argued.

The policy is also responsible for the country’s lag in productivity and stagnant wages, the proposal said.

The panel called on the government and BOJ to assess fiscal and monetary policy over the past decade and come up with a new joint statement.

It also called on the government to play a larger role, saying that it was its responsibility to carry out structural reform.

The proposal said the statement should be revised to outline new goals, such as improved productivity and higher wages.

A 2-percent inflation rate should be a long-term objective instead of a short term one to allow for greater flexibility in implementing policy, it added.

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