The Bank of Japan should maintain its current easy monetary policy until deflation is reined in, a senior official of the International Monetary Fund said Monday.
David Robinson, deputy director of the IMF’s Research Department, said in a presentation in Tokyo that the central bank basically deserves credit, saying, “What the Bank of Japan has done is broadly consistent” with IMF views.
He then urged the BOJ to keep the quantitative monetary policy unchanged and said Japan will hopefully get out of deflation over the next couple of years.
Robinson said the necessary conditions the BOJ set in October 2003 for abandoning the current ultraloose monetary policy are “really helpful.” One of the three conditions is that year-on-year changes in the nationwide consumer price index will stabilize above zero.
As for the Japanese economy, Robinson expressed optimism over its outlook, even though it has been slowing since peaking in the October-December quarter last year.
“We are very optimistic that the recovery will continue, although not at the type of pace we saw in the last couple of quarters,” he said.
The pace of economic growth is apparently on a gradual decline by registering an annualized 6.4 percent in real terms in the January-March period and 1.3 percent in the April-June period this year after hitting 7.6 percent in the October-December period.
Citing a strong pickup in profitability and business confidence and resilient financial sectors, Robinson said: “This recovery is not like a previous recovery we saw in the 1990s. It’s more broadly based.”
On surging crude oil prices, Robinson said their impact on the global economic growth is “much smaller” than shocks seen in past oil crises due to such factors as less dependency on oil for energy and no signs of inflation among industrial countries.
At the same time, Robinson said the uptrend in crude oil prices is “a wakeup call” for the world.
Oil-producing countries need to study ways to boost production while oil consumers must improve energy-efficiency measures, he said.
Monetary base grows
Japan’s monetary base went up 4.7 percent in September from a year earlier following a 4.6 percent rise in August, growing faster than in the previous month for the first time in two months, the Bank of Japan said Monday.
The increase marked the 44th straight monthly rise, the BOJ said.
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