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MNI POLICY: BOJ Adachi:  Policy 2% Target After COVID Wanes

MNI (Sydney)
TOKYO (MNI)

Bank of Japan board member Seiji Adachi said Thursday that monetary policy aimed at achieving the price stability target of 2% should be revisited after the COVID-19 disruptions subside and policy is seen in a post-COVID context.

"I personally think that the policy objectives are generally being achieved, in the sense that they are helping the economy to withstand the spread of Covid-19," Adachi told business leaders in Matsumoto City via an online conference.

--SLOWER ECONOMIC RECOVERY

"Although weakness has been observed, there seems to be no major problems regarding corporate financing, partly due to the effects of various liquidity provisions by the BOJ," Adachi said.

"However, uncertainty remains high regarding the outlook, and if the pace of economic recovery is much slower than expected, it is not possible to completely rule out the risk that firms' positive stance toward the outlook will be lost or that corporate bankruptcies and discontinuation of businesses will increase."

"To avoid such a situation, I believe that it remains necessary in the Covid-19 era to maintain an accommodative monetary policy stance while carefully monitoring economic developments.

--MAINTAIN EASY POLICY

"I believe that it is worth considering whether monetary policy might be able to act as a sort of safety net by providing accommodative financial conditions, rather than as a means of directly promoting such reforms," Adachi said.

"In the medium to long term, maintaining accommodative financial conditions will provide the foundations for normalization of economic activity and achievement of the price stability target."

"If it turns out that we are going to have to live with Covid-19 for the next few years, it will likely become harder to return to the growth path observed before the outbreak."

"I consider it necessary to closely monitor developments in non-regular employment."

Adachi, who took office in March, is the former head of economic research at Marusan Securities,.

He is known as a reflationist and has advocated massive spending to reflate the economy.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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