Japan Should Consider More Fiscal Stimulus

Japan should consider more government spending to maximize the impact of monetary policy, an adviser to Prime Minister Shinzo Abe said on Wednesday, indicating a shift in emphasis to fiscal from monetary policy.

Koichi Hamada, long known as a “reflationist” keen to have the Bank of Japan flood the economy with cash to kindle price rises, singled out the role of fiscal stimulus after a recent policy shift by the central bank was taken to mean the BOJ is in no hurry to boost its massive easing.

“Under the current monetary policy of keeping long-term interest rates around zero percent, if interest rates should rise due to more fiscal spending, monetary policy can rein such moves, and crowding out of private investment won’t happen,” Hamada, an emeritus professor of economics at Yale University and adviser to the cabinet, told Reuters in an interview.

Reuters

Oil and Earnings Eyed as Stocks Remain Vulnerable

USD/JPY – Yen Unchanged as Japanese Inflation Edges Upwards

EUR/USD – Euro Pushes Above 1.09 Despite Soft German Consumer Confidence

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.