G-20 state­ment not a re­stric­tion on BoJ

The Pak Banker - - COMPANIES/BOSS -

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.

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