JAPAN PRESS: BOJ Kiuchi Calls For Monetary Policy Flexibility Bank of Japan board member Takahide Kiuchi said that the BOJ needs to increase flexibility of the current policy commitment of achieving the 2% price stability target. "If the current easy policy is prolonged or the BOJ conducts additional aggressive easy policy (to achieve the 2% target), the adverse effects could be bigger than the positive effects," Kiuchi said in his contribution to weekly magazine "Diamond." Kiuchi also noted that the current policy commitment intensified instability in Japanese government bond markets and reduced the positive effects of the current easy policy. He added that an increase in JGB volatility will put upward pressure on interest rates through a rise in risk premium, which in turn will increase funding costs by firms and households. Kiuchi said that it is appropriate for the BOJ to increase flexibility of monetary policy. The board member at the recent policy-setting meetings proposed that the BOJ should aim to achieve the 2% price stability target in the medium to long term and designate quantitative and qualitative monetary easing as an intensive measure with a time frame of about two years. The proposal was defeated by an 8-1 majority vote at the past meetings. Kiuchi in his contribution repeated his view presented at several past policy-setting meetings, saying, "I think it is very difficult for the BOJ to achieve the 2% price stability target in about two years." "The rise in wages, prices, corporate profits and interest rates in a balanced manner is necessary to achieve improvement of economic environment. It is difficult to achieve them in a short period," he added.
Posted on: Mon, 24 Jun 2013 02:41:29 +0000
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