IMF’s Lagarde: BOJ’s policy good for promoting global growth

The head of the International Monetary Fund hailed Japan’s unprecedented monetary policy boost this week as a welcome support for a world economy that she said has improved from a year ago.

Christine Lagarde said on Sunday the radical $1.4 trillion stimulus from the Bank of Japan (BoJ) would help strengthen the advanced economies, saying growth in countries such as the United States was gaining speed.

But without referring specifically to Japan, Lagarde warned policymakers against thinking that super-loose monetary policy alone could do the heavy lifting in reviving economies, when growth may instead be stifled by unhealthy private and public finances.

“Monetary policies, including unconventional measures, have helped prop up the advanced economies, and in turn, global growth,” Christine Lagarde told a forum in south China.

“The reforms just announced by the Bank of Japan are another welcome step in this direction,” she said. “There is, however, a limit to how effectively monetary policy can continue to shoulder the lion’s share of this effort.”

Central banks still need to heed broken balance sheets that impede lending and plan for and guard against uncertainties arising from any policy change, the IMF chief said.

Reuters

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