Kazuo Momma, a former senior executive at the Bank of Japan (BOJ), said Wednesday, any change in the Japanese political scenario or any Fed’s tapering is unlikely to alter the central bank’s accommodative monetary policy stance.
Key quotes
“You want to keep letting sleeping dogs lie,” referring to the monetary policy stance of Prime Minister Yoshihide Suga and the candidates competing with him in a ruling party leadership contest in September.
“You would be risking a big market reaction by touching monetary policy. So it won’t be a topic of discussion whoever takes the helm.”
“The BOJ has already done everything it can.”
“So coming up with a deflation policy would likely end up becoming a call for more fiscal support, so that’s why the government has nothing to gain by characterizing the current situation as deflation.”
“If that becomes the case, the BOJ could step up its purchases of exchange-traded funds,” said Momma. If markets continued to fall the BOJ could consider cutting negative interest rates further, taking advantage of new support measures for banks it introduced at its March review.”.
“The yen is the biggest risk for them.”
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