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Bank of Japan Gov. Masaru Hayami said Thursday that the central bank’s policy of fighting deflation by implementing credit-easing measures when necessary has been effective thus far.

He observed that short-term and long-term interest rates have fallen sharply and are continuing to fall.

“I think stocks are evaluating our move positively,” Hayami said during a regular news conference. “I hope this trend continues.”

Speaking before the House of Councilors Budget Committee earlier in the day, he said it would be premature for the central bank to adopt an inflation target.

Hayami told the committee that it is difficult to set an appropriate target as the current weakness in prices reflects a variety of factors, including sluggish demand and limited technological innovation.

Hayami added that long-term interest rates in Japan are expected to fall even further if the central bank expands outright purchases of long-term government bonds.

The BOJ raised the target balance for commercial bank reserves to 5 trillion yen from 4 trillion yen the previous day. It will complement this by buying government securities and by continuing to implement credit-easing measures until the consumer price index is at or above zero.

Regarding the ongoing debate on the future of post office savings accounts, Hayami said, “(Funds from these accounts) have played a large role in public investment, but post office savings should be privatized in the long term and compete on an equal footing as private banks for accounts.

“But privatizing this at once brings up many political issues,” Hayami said.

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