Japan's prime minister Hatoyoma and finance minister Kan kept up calls for the Bank of Japan to cooperate in the fight against deflation, as the debt-laden government looks to the central bank to help keep the economy afloat ahead of a mid-year election.
"We would like the BOJ to manage monetary policy in an appropriate, flexible manner to support the economy," Kan said during parliamentary testimony. But the government "will refrain from commenting on specifics on monetary policy." Kan is placing more pressure on the central bank.
But, the BOJ is not responding well to this push.
The Bank of Japan's governor said Friday the central bank sees no need to buy more Japanese government bonds for now, as the nation's financial markets aren't facing an urgent liquidity shortage. "In providing ample funds, we judge that the current amount of outright (JGB) buying is appropriate," BOJ Governor Masaaki Shirakawa said in response to a question after a speech in Tokyo. "The BOJ purchases long-term government debt for the purpose of supplying funds to the private sector and the market," he said. The BOJ decided to raise the limit of JGB buying in March 2009 and now buys Y1.8 trillion per month and Y21.6 trillion annually.
This does not seem like a central banker who wants to end deflation.
The BOJ's policy board voted Tuesday to maintain its policy interest-rate target at 0.1%, which Shirakawa called "virtually zero," as the central bank gauges the effectiveness of previous measures. The central bank also left its assessment of the broad economy unchanged in January, saying, as in the previous two months, it is "picking up."
Yes, bu real rates are still positive so it is hard to say that the bank is trying for an easy policy.
Th new government does not have anything in their bag of tricks so pressure on the central bank makes sense. Here is where QE should be applied.
"We would like the BOJ to manage monetary policy in an appropriate, flexible manner to support the economy," Kan said during parliamentary testimony. But the government "will refrain from commenting on specifics on monetary policy." Kan is placing more pressure on the central bank.
But, the BOJ is not responding well to this push.
The Bank of Japan's governor said Friday the central bank sees no need to buy more Japanese government bonds for now, as the nation's financial markets aren't facing an urgent liquidity shortage. "In providing ample funds, we judge that the current amount of outright (JGB) buying is appropriate," BOJ Governor Masaaki Shirakawa said in response to a question after a speech in Tokyo. "The BOJ purchases long-term government debt for the purpose of supplying funds to the private sector and the market," he said. The BOJ decided to raise the limit of JGB buying in March 2009 and now buys Y1.8 trillion per month and Y21.6 trillion annually.
This does not seem like a central banker who wants to end deflation.
The BOJ's policy board voted Tuesday to maintain its policy interest-rate target at 0.1%, which Shirakawa called "virtually zero," as the central bank gauges the effectiveness of previous measures. The central bank also left its assessment of the broad economy unchanged in January, saying, as in the previous two months, it is "picking up."
Yes, bu real rates are still positive so it is hard to say that the bank is trying for an easy policy.
Th new government does not have anything in their bag of tricks so pressure on the central bank makes sense. Here is where QE should be applied.
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