Abe Government Not Pressuring BoJ For More Action

The Bank of Japan can wait for more data in the summer before it decides whether to ease policy further, a key aide to Prime Minister Shinzo Abe said, indicating the government is not pressing the central bank to immediately bolster the economy.

As the world’s third-biggest economy shows signs of slowing momentum ahead of an April 1 rise in the national sales tax, speculation has risen that the BOJ may need to ramp up its already massive purchases of bonds and other assets.

But Koichi Hamada, professor emeritus of economics at Yale University, told Reuters: “My position is rather optimistic that the Bank of Japan should examine the economy closely when economic data reflecting the tax hike come out.”

Major economic data showing the impact of the tax increase will begin to trickle out from June and July.

“It is uncertain how serious the negative effect of the sales tax hike will be on the economy,” Hamada, one of Abe’s economic advisers, said.

The BOJ last week kept its expansionary policy steady but extended and expanded special loan programs to help boost the economy.

Central bank board member Yoshihisa Morimoto said on Thursday that the BOJ need not wait and react to economic data but could be proactive if its economic forecasts appeared to be in jeopardy.

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