7 February 2001, 13:26 Japan MOF Miyazawa hints BOJ quantitative easing may be viable
By Stephen Cannon, BridgeNews
Tokyo--Feb. 7--Finance Minister Kiichi Miyazawa hinted Wednesday that
quantitative easing might be a viable monetary policy to help stimulate
Japan's economy out of its decade long slump. Miyazawa is generally very
cautious to respect the central bank's independence, but he made definite
jabs to pressure the BOJ with roundabout comments just two days before the
Bank of Japan's Friday policy board meeting.
* * *
Speaking to comments made by state minister for Economic and Fiscal
Policy Taro Aso that quantitative easing might not be effective, Miyazawa
said, "Well speaking to only Aso's comment, and regardless of what the BOJ
should or shouldn't do, I can't really say that's true," Miyazawa said
speaking at a regular press conference.
Senior legislators in the dominant Liberal Democratic Party such as
stock panel head Hideyuki Aizawa have been pushing for the Bank of Japan
to use quantitative easing as a method to boost Japan's flagging stock
market.
Speaking to Aizawa's requests, Miyazawa said, "I'll leave party issues
up to the party. I have no comment (on monetary policy steering)."
Until now, Miyazawa has given little overt indication of his position
on monetary policy steering, but as the effects of the economic slowdown
in the United States visit the Asian region, fears that Japan's economy
could slip back into economic contraction are heightening.
However, while Bank of Japan Governor Masaru Hayami concedes that
Japan's economy has slowed, he has given no indication that the central
bank is considering further loosening its 0.25% overnight unsecured call
rate.
A quantitative easing policy would target a specific money supply
level as opposed to a specific interest rate level, and politicians are
likely expecting a policy that would lead to both a higher money supply
and lower short-term interest rates.
Miyazawa also said that he doesn't oppose the coalition government
parties' joint initiative to relax regulations restricting corporations
from purchasing their own stock as a measure to spur Japan's stock market.
Among the coalition parties' proposals to boost stock share prices,
this corporate equity buyback scheme has attracted the most attention, but
some have warned that the measure could invite insider-trading risks.
Toyota Motor Corp. Chairman Hiroshi Okuda also said he is "outraged"
by the allegations that the U.S. $2.2 billion equity buyback that Toyota
conducted in January was motivated by insider trading. End
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