Prime Minister Junichiro Koizumi expressed caution Tuesday about the Bank of Japan adopting an inflation target to fight deflation at a two-day policy meeting that began the same day.
"I agreed with a proposal" that the government should carefully study the possibility of setting an inflation target because it may cause negative "side effects" on the economy such as a plunge in government bond prices, Koizumi told reporters.
Koizumi said the proposal was laid out earlier in the day by former Prime Minister Kiichi Miyazawa, who also served as finance minister in the Cabinet of the late Prime Minister Keizo Obuchi. Koizumi said he responded to Miyazawa by saying, "I understand (the dangers) well."