But there was little the BOJ can do besides "patiently" sustaining its massive stimulus, Adachi said, offering the most candid comment to date by a BOJ policymaker on the central bank's dwindling ammunition to prop up growth and inflation.
"Personally, I can't think of any new tool to directly push up prices. If there were one, we would have deployed it already," Adachi told a news conference.
While restaurants and hotels may need to continue shouldering the cost of steps to prevent the spread of the virus, consumers may become more willing to pay more for value-added services, Adachi said in a speech delivered before the news conference.
"This could offer firms a chance to charge more for higher quality services," said Adachi, a former market economist.
"A post-pandemic world may offer a big chance to achieve our 2% inflation target," if retailers are able to charge more for their services unlike in Japan's past periods of deflation, he added.
The BOJ currently caps long-term interest rates around zero, and buys huge amounts of government bonds and assets to achieve its elusive 2% inflation target.
It also put in place last year a series of steps to channel money via financial institutions to firms hit by the pandemic.
Adachi said the BOJ must take into account changes in corporate funding conditions in deciding whether to extend the pandemic-relief programme beyond the current September deadline.
While years of aggressive easing helped pull Japan out of deflation, it was difficult to prop up inflation to the BOJ's target just by ramping up an already massive asset-buying programme, Adachi said.
The BOJ may need to respond if the yen spikes on expectations the U.S. Federal Reserve will taper its asset purchases, though it was hard to predict how markets would react to any such move by the Fed, Adachi said.
"Whether the BOJ will respond would depend on whether (the Fed's tapering) triggers a yen rise," he said.
(Reporting by Leika Kihara; Editing by Chang-Ran Kim and Sam Holmes)
By Leika Kihara
