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Free AccessREPEAT: MNI 5 THINGS: BOJ New Deputies Ensure Continued Easing
Repeats Story Initially Transmitted at 11:16 GMT Mar 20/07:16 EST Mar 20
--Amamiya: Won't Rule Out Policy Tweaking Before 2% CPI
--Wakatabe: Should Ease More Without Hesitation If Needed
TOKYO (MNI) - The Bank of Japan's new deputy governors on Tuesday sought to
reassure the public and investors that the central bank will maintain monetary
easing until it anchors inflation around its 2% target, brushing aside any
speculation that the bank is preparing to unwind large monetary stimulus.
However, Masayoshi Amamiya, 62, a career central banker responsible for
drafting many of the bank's policy changes, also told reporters that the BOJ
board may tweak large-scale easing launched nearly five years ago, before
achieving the 2% inflation target, meaning it could raise interest rate targets
before starting to tighten the policy stance.
On the other hand, Masazumi Wakatabe, 53, a reflationist former economics
professor who has advocated bold monetary easing to overcome deflation, argued
that the BOJ should conduct additional easing "without hesitation" if necessary
to achieve the 2% target.
The following are the key points from a news conference by the two
policymakers who began their five-year terms on Tuesday.
--POLICY ADJUSTMENT
Amamiya: The BOJ "theoretically won't rule out" raising interest rates
before it achieves the 2% price target but it is not at a stage to discuss the
need for fine-tuning the easy policy.
Wakatabe: The BOJ must avoid a premature exit from easing; The BOJ should
not publicly debate exit strategies before 2% inflation is anchored.
--2% CPI TARGET
Amamiya: The BOJ is not setting a deadline for achieving 2% inflation but
trying to hit the target "at the earliest possible time." (The BOJ has failed to
meet the initial timeframe of achieving it in about two years from April 2013,
when it began aggressive easing); achieving the 2% price target should help
stabilize currency and other financial markets.
Wakatabe: Lowering the price target from 2% to 1% would be undesirable.
--CONTINUED EASING
Amamiya: The BOJ needs to maintain monetary easing "persistently" in order
to improve the output gap further in positive territory, which should help raise
wages through the tightness of labor market conditions; the benefits of easing
are larger than its costs.
Wakatabe: The BOJ should conduct additional easing "without hesitation" if
necessary to achieve its target and must avoid a premature exit from easing; no
comment on what additional easing tools should be used.
--SIDE EFFECTS
Amamiya and Wakatabe: The sustainability of the yield curve control policy
framework adopted in September 2016 is high.
Amamiya: The BOJ needs to pay attention to the side-effects prolonged
easing that are already emerging.
Wakatabe: No side-effects of easy policy have emerged.
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.