Sakuya Fujiwara, deputy governor of the Bank of Japan, on Thursday called for a policy that would help "directly boost demand" for goods and services as monetary measures have failed to prop up the economy.
"Interest rates have dropped to a level where there is almost no room for a further cut and we cannot put much hope on the effects of monetary policy," Fujiwara told a meeting organized by the business community here. , pointing to the need to examine fiscal spending. "There is fairly large scope for employing (fiscal) policy while reviewing the quality of fiscal expenditures," Fujiwara said.
He dismissed views that the BOJ has not taken steps to reverse the growing deflationary pressure.
"The BOJ will continue to do whatever can be done by a central bank," he said.
He said it may be appropriate to study a proposal to have the BOJ set a target percentage figure for consumer price increases. as a means of boosting the transparency of monetary policy management.
But it would be hard to attain this goal by merely relying on monetary policy resources, now that Japan is confronting a "situation (in which) the effects of a monetary policy relaxation cannot filter down into the economy as a whole," he said.