Federal Reserve Bank of San Francisco President John Williams said Thursday structural reforms are needed if Japan is to solve long-term problems, including its aging society and shrinking workforce, calling monetary policy "a limited tool."
The potential of the Japanese economy and how fast it can grow "depends on structural policies," since taxation and other reforms are critical to having a strong and vibrant economy in the long run, he said in an interview.
Monetary policy and some fiscal policy can help the economy grow during bad times, but "that's really about getting back to the trend, keeping inflation stable around your objectives," Williams said. "Monetary policy does not change the standard of living 30 years from now."