Bank of Japan Gov. Haruhiko Kuroda has forecast victory in his battle against stubborn deflation that has sapped growth for years, but expressed impatience with the pace of Prime Minister Shinzo Abe’s much touted economic plan to jump-start the feeble economy.
The central bank chief said that his unprecedented stimulus measures had boosted economic activity and stoked durable inflation. But he warned that Abe’s team needs to step up its campaign to achieve deeper structural reforms that go beyond the limits of monetary policy so Japan can achieve more sustainable growth in the long term.
Unless Abe acts swiftly, “the real growth rate may be disappointing,” Kuroda said in an interview in The Wall Street Journal on Saturday. “That is not good for the economy, not good for the society.
“Implementation is key, and implementation should be swift,” he added.
Kuroda projected confidence that Japan is on track to hit his target of 2 percent inflation by next year, putting an end to the prolonged deflation that has gripped the world’s third-largest economy.
The bank’s stimulus plan, similar to the U.S. Federal Reserve’s asset-buying plan known as quantitative easing, aims to inject massive sums of money into the financial system by gobbling up government bonds to double Japan’s monetary base and spur 2 percent inflation by next year.
This easing is one of the so-called arrows of Abe’s three-pronged policy blitz dubbed “Abenomics,” which also calls for the usual massive fiscal spending and structural reforms as the prescription for jump-starting growth.
But critics say Abe hasn’t followed through on his plentiful structural reform vows, which include shaking up labor markets, signing free-trade deals and bringing more women into the workforce, among a multitude of other ideas, including cutting corporate taxes.
DBJ to lower interest rates
The Development Bank of Japan will lower interest rates on loans to firms that create jobs and hire women and seniors to spur economic growth in struggling regions, sources close to the matter said.
The move is aimed at boosting local economies, whose dwindling and aging populations are causing a drop in regional business activity.
“It’s necessary for regional economies to get better so as to reconstruct the whole country,” a DBJ official in charge of lending said Saturday.
The state-run bank will decide the preferential lending rates on a case-by-case basis by evaluating each firm, the sources said. The evaluation standards will also include factors such as whether firms make use of local tourist resources or materials in their businesses, and whether they try to attract personnel, materials and funds from other areas of Japan and abroad for regional revitalization, they said.
Under a program launched in 2010 to stimulate regional economies, the DBJ lent ¥23.7 billion to 63 firms over the past year to March. It plans to double the loans to 120, and the total to ¥50 million, this year.