The Bank of Japan should be proactive in setting policy as uncertainties about the overseas economic outlook and domestic power supply increase, Policy Board member Hidetoshi Kamezaki said.
“The bank must always be ready to proactively implement the necessary policies to achieve its objectives” of pulling the economy out of deflation and promoting sustainable growth, he said Wednesday in a speech in Mie Prefecture.
BOJ Deputy Gov. Hirohide Yamaguchi pledged last week “decisive” policy action when needed as Europe’s sovereign-debt crisis poses greater risks to the global economy.
The BOJ has refrained from expanding its asset-buying fund since doubling it to ¥10 trillion in March to support the economy after the Tohoku disaster.
“The economy is expected to return to a moderate recovery path from the second half of the fiscal year” as exports increase and demand for reconstruction after the quake rises, said Kamezaki, 68, a former executive of Mitsubishi Corp.
“However, in the longer run, it’s necessary to be aware of downside risks.”
Worsening fiscal conditions in Europe, overheating in emerging economies and surges in commodity costs are risks for the global economy, he said.
The BOJ left the benchmark lending rate between zero and 0.1 percent at a meeting earlier this month. The Policy Board will next meet on Aug. 4 and 5.
Kamezaki said he is “very concerned” about the possibility that manufacturers may speed up shifting production abroad if power supply concerns intensify.
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