ID :
77831
Tue, 09/01/2009 - 12:23
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http://m.oananews.org//node/77831
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BOJ hopes DPJ will properly steer economy, shy about bond purchases
OSAKA, Aug. 31 Kyodo -
Bank of Japan Governor Masaaki Shirakawa voiced hope Monday that the Democratic
Party of Japan, which clinched a sweeping victory in Sunday's general election,
will adequately steer the Japanese economy while signaling the bank's
reluctance about possible additional purchases of government bonds to finance
policies the party has pledged.
''I hope that the new government will implement appropriate policies to
overcome the various challenges Japan is facing,'' Shirakawa said at a news
conference in Osaka.
He also said the bank intends to communicate closely with the new government.
The DPJ, which has never governed since its inception in 1996, scored a
landslide victory in Sunday's House of Representatives election, pledging that
the party will provide cash handouts for families with children and phase out
highway tolls once it takes power.
Asked about the BOJ's stance if the DPJ were to press the central bank to buy
more government bonds to finance its policy programs, Shirakawa said that the
purpose of monetary policy is to achieve sustainable economic growth with
stable prices and if that commitment is doubted, markets will push up long-term
interest rates.
''It all comes down to the fact that we implement monetary policies in the
spirit of the Bank of Japan Law,'' which values the bank's autonomy in monetary
policy, he said.
The central bank has been buying government bonds worth 1.8 trillion yen per
month recently as part of its money-market operations. The bank sets a
self-imposed rule of keeping such purchases below the amount of circulating
bank notes, and Shirakawa has said there is not much room left to increase bond
buying.
In a speech to local business leaders earlier in the day, Shirakawa warned that
an anticipated recovery of the Japanese economy will likely be ''only
moderate,'' citing concerns over weak spending by consumers and businesses as
well as uncertain prospects for the overseas economy.
He said the BOJ continues to believe Japan's economy will start recovering from
the latter half of fiscal 2009.
''However, I will hasten to add that the bank judges that the pace of recovery
is highly likely to be only moderate,'' he said.
''It is hard to assume a marked and rapid recovery in exports,'' he said. ''In
addition, against a backdrop of excessive capital stock and the severe
employment and income situations, business fixed investment and private
consumption are likely to remain relatively weak for the time being.''
The Japanese economy has just emerged from its deepest postwar recession in the
April to June quarter, with the nation's gross domestic product registering
annualized real growth of 3.7 percent for the first expansion in five quarters.
With regard to consumer prices that have been falling at a record fast pace in
recent months, Shirakawa said the rate of decline is likely to slow as the
effects of the previous year's record-high energy costs are expected to
diminish gradually from autumn.
But he also said, ''The downward pressure on prices is likely to persist for a
long period (if the economy recovers only mildly in line with the bank's
projection).''
The central bank is already predicting at least two years of deflation,
projecting the nation's consumer price index, excluding volatile fresh food
prices, will fall 1.3 percent in fiscal 2009 and 1.0 percent in fiscal 2010.
Shirakawa declined to comment on whether the bank will expect another fall when
it releases its CPI projection for fiscal 2011 in October.
As for the extraordinary measures the BOJ has taken to combat the global
financial crisis, Shirakawa said the central bank had no preconceptions about
what to do with the programs beyond their expiration at the end of the year.
To support corporate financing, the BOJ has been buying corporate debt from
banks and providing them with unlimited low-interest loans since early this
year. At a July policy meeting, the bank decided to extend the expiration date
of the measures from the Sept. 30 deadline to Dec. 31, judging that the
corporate financing situation remains severe.
==Kyodo
Bank of Japan Governor Masaaki Shirakawa voiced hope Monday that the Democratic
Party of Japan, which clinched a sweeping victory in Sunday's general election,
will adequately steer the Japanese economy while signaling the bank's
reluctance about possible additional purchases of government bonds to finance
policies the party has pledged.
''I hope that the new government will implement appropriate policies to
overcome the various challenges Japan is facing,'' Shirakawa said at a news
conference in Osaka.
He also said the bank intends to communicate closely with the new government.
The DPJ, which has never governed since its inception in 1996, scored a
landslide victory in Sunday's House of Representatives election, pledging that
the party will provide cash handouts for families with children and phase out
highway tolls once it takes power.
Asked about the BOJ's stance if the DPJ were to press the central bank to buy
more government bonds to finance its policy programs, Shirakawa said that the
purpose of monetary policy is to achieve sustainable economic growth with
stable prices and if that commitment is doubted, markets will push up long-term
interest rates.
''It all comes down to the fact that we implement monetary policies in the
spirit of the Bank of Japan Law,'' which values the bank's autonomy in monetary
policy, he said.
The central bank has been buying government bonds worth 1.8 trillion yen per
month recently as part of its money-market operations. The bank sets a
self-imposed rule of keeping such purchases below the amount of circulating
bank notes, and Shirakawa has said there is not much room left to increase bond
buying.
In a speech to local business leaders earlier in the day, Shirakawa warned that
an anticipated recovery of the Japanese economy will likely be ''only
moderate,'' citing concerns over weak spending by consumers and businesses as
well as uncertain prospects for the overseas economy.
He said the BOJ continues to believe Japan's economy will start recovering from
the latter half of fiscal 2009.
''However, I will hasten to add that the bank judges that the pace of recovery
is highly likely to be only moderate,'' he said.
''It is hard to assume a marked and rapid recovery in exports,'' he said. ''In
addition, against a backdrop of excessive capital stock and the severe
employment and income situations, business fixed investment and private
consumption are likely to remain relatively weak for the time being.''
The Japanese economy has just emerged from its deepest postwar recession in the
April to June quarter, with the nation's gross domestic product registering
annualized real growth of 3.7 percent for the first expansion in five quarters.
With regard to consumer prices that have been falling at a record fast pace in
recent months, Shirakawa said the rate of decline is likely to slow as the
effects of the previous year's record-high energy costs are expected to
diminish gradually from autumn.
But he also said, ''The downward pressure on prices is likely to persist for a
long period (if the economy recovers only mildly in line with the bank's
projection).''
The central bank is already predicting at least two years of deflation,
projecting the nation's consumer price index, excluding volatile fresh food
prices, will fall 1.3 percent in fiscal 2009 and 1.0 percent in fiscal 2010.
Shirakawa declined to comment on whether the bank will expect another fall when
it releases its CPI projection for fiscal 2011 in October.
As for the extraordinary measures the BOJ has taken to combat the global
financial crisis, Shirakawa said the central bank had no preconceptions about
what to do with the programs beyond their expiration at the end of the year.
To support corporate financing, the BOJ has been buying corporate debt from
banks and providing them with unlimited low-interest loans since early this
year. At a July policy meeting, the bank decided to extend the expiration date
of the measures from the Sept. 30 deadline to Dec. 31, judging that the
corporate financing situation remains severe.
==Kyodo
