• Hamada says 'no need' for easing at Friday's BOJ meeting
  • Says recent price gauge shows inflation trend is improving

The Bank of Japan doesn’t need to rush to add further stimulus this week as an inflation measure excluding the effect of lower oil costs shows consumer prices are rising, said an economic adviser to Prime Minister Shinzo Abe.

“The BOJ’s new core CPI measure that excludes fresh food and also energy is a better indicator to discern the trend of prices now,” the adviser, Koichi Hamada, said in an interview on Tuesday in Tokyo. “As long as the new core measure is rising, the BOJ has no need to expand its monetary policy.”

BOJ Governor Haruhiko Kuroda this month cited that price gauge as a sign that the inflation trend is “surely improving.” The BOJ began including the measure in a monthly report in July as the bank says low oil prices have made it hard to see underlying trends.

Tight labor-market conditions and the yen holding at about 120 yen per dollar also aren’t pointing to the need for further easing, said Hamada, who is an emeritus economics professor at Yale University.

“The current level of the yen isn’t problematic,” Hamada said. “It can’t be said to be excessively weak unless the economy heats up too much and import prices rise too much.”

Prices excluding fresh food and energy rose 1.1 percent in August while prices excluding only fresh food declined for the first time since April 2013.

The BOJ will update its outlook for consumer prices excluding fresh food on Oct. 30, with many economists expecting cuts in the forecasts and a delay in the timing of achieving the inflation target. Currently, the bank says it sees prices reaching 2 percent around the six months through September 2016.

While 16 of 36 analysts surveyed by Bloomberg said they expect additional easing this week, eight forecast further easing at a later date and 12 see no prospect of any policy change.

Even if the U.S. Federal Reserve were to raise rates for the first time since 2006, the yen is unlikely to weaken to a level that would be problematic for Japan’s economy, Hamada said. The Fed will announce policy the day before the BOJ.

“A Fed rate hike would be a tailwind for Japan’s economy and the BOJ as that will probably keep the yen weak,” Hamada said. “The action will reduce uncertainties in the global economy.”

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