Bank of Japan Gov. Toshihiko Fukui underscored on Wednesday his determination to fight deflation, stating the central bank will take “unlimited risks” until prices rise.
“To lift (year-on-year changes in the consumer price index) into positive territory, we will take unlimited risks,” Fukui said during a question-and-answer session at a lecture hosted by Kyodo News.
Fukui said the central bank will continue to implement easing measures even after inflation hopes start to rise.
He said he expects the BOJ to be questioned eventually over its monetary-easing measures amid rising inflation hopes, adding that the central bank will present a policy on its response to such a development.
Fukui once again voiced opposition toward the introduction of an inflation target as a means of overcoming deflation. He said the current situation cannot be solved merely “by presenting a different plan that is aimed at giving a feeling of security.”
Fukui said that the overall economy remains flat, with the corporate sector showing signs of improvement but personal consumption remaining weak.
He voiced hope for a positive economic cycle led by growth in overseas economies in the second half of the year.
Fukui said Japan should seek more free-trade agreements with other nations.
“Japan is lagging behind severely in terms of the concluding of FTAs,” he said. “We hope government efforts to expand such agreements will be strengthened.”
The BOJ chief expressed confidence that the central bank’s program for an outright purchase of asset-backed commercial paper will promote the development of the asset-backed securities market.
“Judging from the information we have obtained so far, it is possible that the BOJ’s involvement will serve as a catalyst for boosting activity in the market,” Fukui said.
Mizuho Corporate Bank is set to become the first financial institution to use the program, planning to sell between 20 billion yen and 30 billion yen of ABCP in the near future.
Share purchases up
The Bank of Japan said Wednesday its purchases of shares from banks totaled 1.506 trillion yen as of Sunday, reaching the halfway point to its 3 trillion yen ceiling.
The BOJ began buying shares from commercial banks through a trust bank Nov. 29, following a decision by the central bank’s Policy Board in September to buy shares from banks to protect their balance sheets from stock price falls.
The BOJ in March raised the amount of shares it plans to buy to 3 trillion yen from the initially planned 2 trillion yen. It buys shares from banks whose shareholdings exceed their core capital.
The pace of the stock purchases, which are due to last through September, has slowed in recent months because of the stock market’s upsurge, which began after the key Nikkei average hit a string of 20-year lows in late April. The BOJ announces the outstanding balance of purchases every 10 days.
It stops short of disclosing the names of shares purchased or the banks from which they were bought.