MOSCOW – Bank of Japan Gov. Haruhiko Kuroda said confidence in the radical monetary easing experiment he has launched is spreading among the Group of 20 finance chiefs.
“Understanding for the BOJ’s qualitative and quantitative easing is deepening,” Kuroda said Saturday in Moscow after finance ministers and central bankers from the world’s 20 largest economies wrapped up a two-day meeting.
“While it takes time to achieve the 2 percent inflation target (adopted by the BOJ), monetary easing is steadily achieving” the goal of boosting the domestic economy, he said.
On Friday, Finance Minister Taro Aso said Japan is ready to help offset weakness in the global economy as the G-20 finance heads discussed the potentially adverse effects that emerging economies could face if the U.S. Federal Reserve begins scaling back its own stimulus policy.
Separate comments by Japanese officials meanwhile signaled support for Prime Minister Shinzo Abe, whose ruling Liberal Democratic Party was forecast to sweep the Upper House election Sunday and take full control of the Diet.
“This is a rare occasion for Japan to proudly talk about its economy at an international meeting after decades of stagnation,” said Naoki Iizuka, an economist at Citigroup Inc. in Tokyo. Government officials “want to help Abe’s election (chances) by emphasizing their success in reviving the economy.”
The G-20 said in a communique Saturday that “there are signs of strengthening activity in the U.S. and Japan,” but that the global economy remains too weak.
The prime minister’s “Abenomics” strategy has buoyed the economy since he took office in December by weakening the yen, jawboning the stock market to hike exporters’ profits and improving sentiment with a radical deflation-busting stimulus plan and a ¥10.3 trillion spending package.
The International Monetary Fund this month raised its 2013 economic forecast for Japan to 2 percent from a projection of 1.6 percent in April, while reducing estimates for global growth.
A victory for Abe’s LDP-led ruling coalition in the House of Councilors election would put an end to the “twisted Diet” and give him the strongest grip on power any Japanese leader has had since 2007.
One of the focal points of what may follow is whether Abe will hike the consumption tax in April 2014. Aso said Saturday he wants to increase the levy as scheduled, but Koichi Hamada, Abe’s economic adviser, last week said the plan threatens to roil a potential economic recovery.
Gov. Kuroda on Friday renewed his pledge to continue the BOJ’s “powerful easing” measures to attain the 2 percent inflation goal and said that it’s natural for the Fed to start slowing its asset purchases amid solid signs of a U.S. economic recovery.
Kuroda has been sticking to his guns since being fast-tracked to head of the central bank. He started by doubling the bank’s monthly bond purchases to more than ¥7 trillion in April, after Abe urged it to take steps to reverse a 15-year deflationary spiral.