September 2, 2021

Japan Ready to Increase Stimulus? This is the comment of the BOJ Policy Maker

 Bank of Japan (BOJ) policymaker Goushi Kataoka said a coronavirus outbreak is likely to weigh on the economy longer than expected, and warned of increased risks in Japan’s economic recovery.

Kataoka also stressed the BOJ’s readiness to increase stimulus if needed, reinforcing market expectations that Japan will continue to remain with a very loose monetary policy.

In his speech on Thursday, Kataoka said Japan’s economic outlook is tied to uncertainty, with consumption seen to be still severe due to the state of emergency implemented to curb the spread of Covid-19.

In addition, he also called for the BOJ to aggressively increase bond purchases to lower borrowing costs for companies, so that they can increase capital spending and invest in growth areas.

He added that the government and the central bank must communicate in determining policy. The role of the BOJ is to take steps to achieve 2% inflation as soon as possible.

However, according to Kataoka’s personal view, he said the BOJ needs to strengthen monetary easing as inflation will remain far from the 2% target for years to come even as the economy recovers.

Under a policy called yield curve control, the BOJ sets short -term interest rates at -0.1% and 10 -year bond yields around 0% through mass asset purchases.

The yen, however, failed to react to this statement, remaining stable against the US dollar around 110.00 at the opening of the European session.