Tags: Japan | BOJ | Easing

Report: Japanese Government to Call for BOJ Easing

Thursday, 26 Aug 2010 07:20 AM

Japan's government will urge the Bank of Japan to ease monetary policy further as part of a package of steps to stem the yen's rise and support the fragile economy, the Asahi newspaper said, ratcheting up pressure on the central bank to take action before a policy meeting next month.

Japanese policymakers have scrambled to talk down the yen, which rose to a 15-year high against the dollar this week, and have hinted at the possibility of intervening in the markets for the first time since 2004.

"The government apparently is counting on the BOJ's further easing to slow the yen's rise as it wants to avoid actually intervening in the currency market and causing friction with the United States that wants a weak dollar," said Seiji Adachi, senior economist at Deutsche Securities.

"The BOJ may resignedly ease its policy further in the face of government pressure, but its steps are likely to have short-term impacts."

The BOJ is considering easing monetary policy further at its next rate review on September 6-7 or earlier, with the most likely option an expansion of its cheap fixed-rate loan program for banks put in place in December, sources said.

Prime Minister Naoto Kan is mapping out a series of steps to spur growth, such as extending the deadline for subsidies on purchases of energy-efficient electronics, but the government's options are limited with public debt nearly twice the size of the economy.

That is putting pressure on the BOJ to do its part to help the economy.

Asahi said the government package is expected to be outlined by the end of this month and will stress the need to work increasingly closely with the central bank to deal with rapid rises in the yen that are threatening Japan's export-reliant economy.

The package will also call for more action from the central bank, urging it to make its "utmost effort" to beat deflation, according to a draft of the steps cited by the newspaper.

Some analysts say if the yen appreciates rapidly and shoots past 80 to the dollar, the central bank may hold an emergency meeting to decide further easing before the government package comes out.

© 2017 Thomson/Reuters. All rights reserved.

 
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Japan's government will urge the Bank of Japan to ease monetary policy further as part of a package of steps to stem the yen's rise and support the fragile economy, the Asahi newspaper said, ratcheting up pressure on the central bank to take action before a policy meeting...
Japan,BOJ,Easing
362
2010-20-26
Thursday, 26 Aug 2010 07:20 AM
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