TOKYO (AFX-ASIA) - Bank of Japan deputy governor Yutaka Yamaguchi said the central bank will monitor progress in structural reforms, as well as global economic developments, in deciding its monetary policy stance.
"The BoJ will take appropriate monetary policy by examining developments in the world economy, especially the IT sector, and progress in the government's structural reforms on the financial and industrial fronts," he said.
"Only three months have past since we took bold monetary easing steps on March 19 but there are already some positive effects," Yamaguchi said.
"But to see a deeper effect in the real economy, it is indispensable that financial and structural reforms progress," he said.
"The current easy policy will contribute to further enhancing the effects if companies begin to move to address structural reforms," he added in a prepared speech given to business leaders in Sendai, Miyagi prefecture.
Yamaguchi said the central bank would carefully monitor the economic downturn in Japan, which he said is likely to continue for now, and particularly the ongoing decline in technology investment. "The economy will continue its correction phase for the time being as the downturn in capital investment has so far been increasing," he said.
"Declines in exports and production, centred on IT-related sectors, may affect employment and wages, as well as corporate profits in the future. We need to closely watch developments."
However, Yamaguchi added that the action taken so far by the bank has helped to improve conditions for domestic companies.
"For example, long-term interest rates have dropped below the levels seen when we introduced the zero interest rate policy," he said.
"Moreover, the climate for corporate fund raising has improved in the commercial-paper and straight-bond markets."