Tags: bank | japan | easing | boj

BOJ Official: Bank of Japan Could Add Further Easing if Needed

Thursday, 31 Jan 2013 04:13 PM

 

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The Bank of Japan could add further stimulus if warranted by economic and price conditions, Deputy Governor Hirohide Yamaguchi said.

“It could be the case that further accommodation will be pursued,” Yamaguchi, whose term ends in March, said in a speech in Nagasaki. “The bank intends to make as decisive policy responses as ever while steadily examining the situation of economic activity and prices.”

The central bank last week adopted the government’s requested 2 percent inflation target without a deadline and said it would wait until 2014 to start open-ended asset purchases. Prime Minister Shinzo Abe said today that the bank is responsible for reaching the target quickly.

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“This speech shows the BOJ is trying to escape from rising political pressure by signaling its willingness for more action,” said Hideo Kumano, chief economist at Dai-Ichi Life Research Institute in Tokyo and a former central bank official. “The BOJ may have to ease further in the next few months.”

Japan’s consumer prices fell 0.2 percent in December, the 17th drop in the last 24 months, suggesting that the economy is still far from sustained price gains.

The yen rose and the Nikkei 225 Stock Average fell last week after the bank announced that it would postpone open-ended asset purchases to next year. Kumano expects that the bank may start open-ended asset purchases earlier than the planned January 2014 start date.

Currently, the bank buys securities such as government bonds and exchange-traded funds through a fund targeted to reach 76 trillion yen ($837 billion) in assets in December 2013.

Yamaguchi said the bank’s price stability target is the same as “flexible inflation targeting” adopted by many central banks.

“The bank will pursue aggressive monetary easing, aiming to achieve the price stability target, through a virtually zero interest rate policy and purchases of financial assets, as long as the bank judges it appropriate to continue,” Yamaguchi said.

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