MNI INTERVIEW2: Policy Poses 'CenBank Put' Risk-Ex-BOJ Offl

By Hiroshi Inoue

     TOKYO (MNI) - Investors may be coming to rely on a central bank 'put

option', making it more difficult for policy makers to withdraw unprecedented

monetary stimulus, a former BOJ executive director told MNI.

     "The impact on asset prices, especially stock prices, is considerable. The

recovery of stock prices has been rapid around the globe, reflecting investor

views that individual fiscal and monetary authorities will implement further

policies if the economy worsens or stock prices drop," Kenzo Yamamoto, now a

representative for KYinitiative,said in an interview.

     "Looking ahead, when economic and financial conditions calm down, the

authorities must unwind their policies before the economy falls into a dangerous

zone, although it is obvious that Japan is already there," he said.

     Japan faces dangers from too slow a removal of emergency aid for companies,

asset bubbles, and ballooning government debt, he said, adding that, while

inflation could also pick up from current depressed levels, though there was no

certainty that this would occur.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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