G-20 statement not a restriction on BoJ
The Group of 20's agreement that monetary policy alone cannot lead to balanced growth does not place any restrictions on the Bank of Japan's ability to expand its negative interest rate policy, an adviser to Japan's prime minister said on Wednesday.
The BoJ should calmly study the impact of its negative rate policy, which came into effect last month, when deciding its next move, Masahiko Shibayama told media in an interview. It is too early to discuss an extra budget to fund stimulus spending for next fiscal year, but the government needs to accelerate structural reforms to secure stronger economic growth, Shibayama said. G-20 countries agreed at a Shanghai summit over the weekend to make more use of fiscal policy and structural reforms to bolster growth, sending a strong message that policymakers have relied too much on unconventional monetary policy. Some economists have said the G20 agreement means the BoJ could face criticism from abroad if it expands its negative interest rate policy too aggressively.
"The G20 statement does not place any new restrictions on BoJ policy," Shibayama said. The adviser also said "I hope the BOJ calmly analyses the impact negative interest rates have had, which should feed into their decision about the next steps to take." Last month, the BoJ began charging commercial banks 0.1 percent interest on a small portion of the reserves they keep at the central bank. The BoJ wants to encourage banks to lend more, which would help the central bank meet its 2 percent price target.