Bank of Japan Governor Toshihiko Fukui said on Sunday he saw no abrupt change in the country's four-year-old ultra-easy monetary policy and that a possible change in monetary policy required careful judgement.
Speaking to reporters on the sidelines of a two-monthly meeting of G10 industrialised and emerging central bankers' in the Swiss city of Basel, Fukui also said the global economy was still performing well despite the obvious risk from high oil prices.
Speculation is rife that the BOJ wil end its super-loose policy of flooding the money market with cash sometime next year as the economy recovers and the deflation that has plagued Japan for more than seven years moderates.
"Japan's economic situation is in an important stage. Price judgement is needed about the future course (of monetary policy) but I have no determined idea," Fukui said.
"The board members need to gather more information... But no abrupt change is forseen."
The BOJ has promised to maintain the current accommodative framework until year-on-year changes in the consumer price index stabilise above zero percent.
The central bank forecasts the CPI would post a year-on-year rise of 0.5 percent for the year starting next April, raising its view from a previous forecast of a 0.3 percent increase.
The nation-wide core CPI for September was down 0.3 percent. October data is due later this month.
Fukui has said the BOJ may not move to shift policy immediately even afer consumer prices start rising.
GLOBAL END TO EASY POLICY?
While the BOJ sticks to its easy monetary policy the rest of the world is moving towards higher interest rates, with the US Federal Reserve raising interest rates 12 times since June 2004 to 4 percent.
The market also expects the European Central Bank to raise interest rates for the first time in five years by the first quarter of 2005.
Fukui said: "People think the withdrawal of monetary accommodation is about to get underway. People can price in before any possible change (in the monetary policy) on a global basis."
Fukui said central bankers gathering in Basel for the two-day meeting would discuss the state of the global economy as well as risks including oil prices.
"The global economy still remains in a good shape. We will repeat the discussion about possible risks. Number one (risk) is no doubt oil prices."
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