Japan: IMF’s Furusawa says premature for BOJ to withdraw stimulus – 7 May 2017

  • Japan’s economy still needs support from ultra-loose monetary policy despite budding signs of recovery, a senior IMF official said, stressing that it was premature for the central bank to consider withdrawing stimulus any time soon.
  • Mitsuhiro Furusawa, the International Monetary Fund’s deputy managing director, said Japan should proceed with gradual increases in the sales tax to rein in its huge public debt as its economy benefits from a rebound in global demand.
  • But Japan’s economy has not strengthened enough to pull the plug on monetary support, Furusawa said, adding that continued ultra-loose policy was crucial to make the recovery sustainable.
  • Japan’s economy has shown signs of life, as exports rose the most in over two years in Mar 17 and manufacturers’ confidence hit the highest since the global financial crisis a decade ago.
  • BOJ Governor Haruhiko Kuroda told a CNBC interview on 5 May 17 that he was confident inflation will accelerate “significantly” with massive monetary stimulus and fiscal support.
  • With the economy out of the doldrums, many analysts polled by Reuters expect the BOJ’s next move to be a tightening, rather than a further easing, of monetary policy.
  • But core consumer prices for Mar 17 rose just 0.2% y/y, well below the BOJ’s 2% target, a sign the Japanese central bank will lag behind its major counterparts in withdrawing monetary stimulus.
  • Tax hikes are considered crucial to curb Japan’s huge public debt which, at twice the size of its economy, is the worst among advanced economies.

External Link : https://japantoday.com/category/politics/IMF’s-Furusawa-says-premature-for-BOJ-to-withdraw-stimulus

7-May-2017


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