SAITAMA – A Bank of Japan policymaker on Monday voiced fears that the uncertainty created by U.S. President-elect Donald Trump’s economic policies will negatively impact the financial markets.
“I am particularly concerned about the risks that global financial markets will experience sudden changes against a backdrop of growing uncertainties over overseas economies,” Takako Masai said in a speech to business leaders in Saitama Prefecture.
The remarks by the BOJ Policy Board member come as stock, currency and bond markets gyrate in the wake of Republican Trump’s shock victory in the U.S. presidential election earlier this month.
“Uncertainties are expected to linger, such as economic policy management by the new U.S. government, Britain’s negotiations to leave the European Union and problems in the financial sector in Europe,” Masai said. “Under such circumstances, financial markets are likely to become volatile.”
Apparently reflecting her concern, the BOJ on Thursday announced its first fixed-rate buying operation since adopting the new policy in September to curb surges in interest rates following the U.S. presidential election.
Interest rates in Japan have been on an upward trend in line with increases in U.S. Treasury yields, amid mounting speculation that the Trump administration may boost government spending, causing higher inflation in the United States.
At its Policy Board meeting in September, the BOJ decided to shift its policy target to the Japan government bond yield curve instead of quantitative easing, aiming to continue its long-term battle to stoke 2 percent inflation.
Masai, formerly an executive officer at a private Japanese bank, also said in the speech that the central bank should carefully maneuver its monetary policy while avoiding increasing volatility in financial markets.
She became one of the nine BOJ Policy Board members in June.
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