BOJ Member Defends Surprise Stimulus

A Bank of Japan board member who voted for last month’s huge monetary expansion defended the move on Wednesday, saying that failing to act would have cast doubt on the bank’s determination to hit its price goal and undermined its credibility.

Having deployed “the maximum scale of stimulus possible,” the BOJ can now wait to see how much the move will support the economy and prices, Sayuri Shirai said, signaling that no further monetary easing was necessary in the near term.

“We don’t ease policy each time (economic and price) growth undershoots our expectations,” she told a news conference.

 
Shirai, one of two academics who held casting votes in last month’s close-call decision, said she initially thought about holding off on further boosting the stimulus.

But she eventually decided to support Governor Haruhiko Kuroda’s expanded stimulus plan to head off the risk of slowing inflation and demonstrate the BOJ’s conviction to achieve its 2 percent inflation target.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza