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--BOJ Dep Gov Nominee Wakatabe: To Propose More Easing If Needed
TOKYO (MNI) - Government nominees for the Bank of Japan deputy governors --
Masayoshi Amamiya, executive director in charge of monetary policy at the BOJ,
and Masazumi Wakatabe, an economics professor sympathetic to Prime Minister
Shinzo Abe's reflationary policy mix -- made the following points Monday at
their confirmation hearing held by the Lower House Steering Committee.
Pending Diet approval, the two will replace Hiroshi Nakaso and Kikuo Iwata,
whose five-year terms end on March 19.
Amamiya, 62, is a career central banker. He has been responsible for
drafting many of the bank's monetary policy measures, including the policies on
quantitative and quality easing and negative interest rates. Wakatabe, 52, is a
reflationist who has advocated bold monetary easing to overcome deflation. He
teaches economics at Waseda University in Tokyo.
-- Amamiya said BOJ officials "are discussing what exit options the BOJ has
and how they should be used" in preparation for the eventual unwinding of
large-scale monetary easing. He didn't elaborate further but said how the BOJ
should exit from easing will depend on economic and financial conditions at the
time. Wakatabe said that the BOJ must avoid a premature exit from easing, which
would send Japan back into deflation.
--Amamiya also said the BOJ is "well equipped with options" to reduce the
degree of easing without upsetting the markets or hurting the economy. The bank
will keep two points in mind: "One is how to shrink the expanded balance sheet
and the other one is how to normalize short-term interest rates."
--Amamiya repeated the BOJ's mantra that achieving the 2% inflation target,
which the BOJ sees as a global standard, should help stabilize foreign exchange
and other financial markets "in the long run." (BOJ officials have explained
that targeting a lower inflation rate, like 1%, would trigger an unwanted rise
in the yen and run counter to Japan's bid to reflate the economy.)
-- Both Amamiya and Wakatabe stuck to the official line, saying the
benefits of aggressive easing are bigger than its costs. Amamiya said that the
negative interest rate policy, which was adopted in 2016, is squeezing profits
for lenders but it is not hurting the financial intermediation because banks
have enough capital. But he also said the negative impact of easing is
accumulating and thus that the BOJ will carefully watch the development.
Wakatabe argued the side-effects of the easy policy hasn't materialized.
--Wakatabe said he would like to assess whether the current easy policy is
enough to achieve the 2% price target and that he would propose to conduct
additional easing if necessary. He also said that there is no limit to
additional easing tools but declined to give details.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: firstname.lastname@example.org