The deputy governor of the Bank of Japan said Thursday that discussion among BOJ Policy Board members on abandoning the zero-interest-rate policy is gradually heating up, citing improvements in private demand.
During a lecture in Fukuoka, Sakuya Fujiwara said recent signs of improvement in private demand have led him to believe that the economy may be approaching a juncture where “one can foresee a dissipation of deflationary concerns.”
But he warned observers against developing excessive optimism over an end to the zero-interest policy, saying the central bank remains concerned about signs of economic weakness. “There remain some points that need to be analyzed and confirmed carefully,” he said.
The BOJ has repeatedly vowed to scrap the extremely easy monetary policy of keeping the overnight call money lending rate at essentially zero if the economy shows signs of being free from deflationary pressure.
In his carefully worded assessment of the state of the economy, Fujiwara said the economy has begun to draw strength from private-sector demand — which comprises corporate capital outlays, housing investment and private consumption — despite a marked drop in government spending.