BOJ Beat: Reflationist Lawmaker Has High Hopes for Bold Easing


2013年3月28日 The Wall Street Journal

2013年3月28日 The Wall Street Journal


TOKYO—Kozo Yamamoto, a former finance-ministry official and veteran lawmaker of Japan’s ruling Liberal Democratic Party, is a close ally of Prime Minister Shinzo Abe, and has been one of the party’s staunchest proponents of aggressive monetary easing to reverse 15 years of deflation. With markets anticipating decisive action at the Bank of Japan’s policy-board meeting next week—the first under the Gov. Haruhiko Kuroda—JRT asked Mr. Yamamoto how he views the new top team and what measures he expects from the central bank.

JRT: How would you evaluate the new BOJ leadership?
Mr. Yamamoto: I have very high expectations. I believe Gov. Kuroda and Deputy Gov. Kikuo Iwata both understand the importance of the reflationary policies we have been calling for, and I expect them to push forward with bold policy shifts to lift the nation out of deflation. I’ve been at odds with the BOJ for the past two decades over how to beat deflation, and am glad that we finally seem to be moving forward.

JRT: The BOJ agreed in January to adopt a 2% inflation target, and Gov. Kuroda has said the central bank would do everything necessary to achieve this goal in two years. What specific steps do you think need to be taken?
Mr. Yamamoto: Speaking in general terms, buying government bonds with longer maturities would be the first thing to do. The central bank needs to increase its monetary base. I would buy an additional ¥5 trillion (about $53 billion) a month to bring up the total to around ¥160 trillion to ¥170 trillion (from ¥129.3 trillion as of February). Looking at past data, I’d say that would lift the expected inflation rate to about 2%. Real inflation will follow. Personally, I think the BOJ should continue purchases indefinitely until the goal is reached.

JRT: Do you think the yen’s recent weakness and rise in share prices are having an impact on the real economy? What would you consider an appropriate level?
Mr. Yamamoto: I believe they are. Consumer confidence appears to be doing better, and I think we’ll also be seeing various indicators showing signs of improvement. Regarding exchange rates and share prices, past data suggests that the yen could weaken to around ¥98 to the dollar and the Nikkei average rise to around 11600 if inflation reaches 2%. But then, we’ve already seen the Nikkei surpass that level.

JRT: You’ve been an advocate of revising the BOJ law to hold the central bank more accountable for its monetary policy. With the new BOJ leadership in place, what are your views now?
Mr. Yamamoto: At this stage we should be focused on closely watching what policies the BOJ will roll out. Any serious debate should wait until after the July upper-house election, where an LDP victory could set the stage for any necessary revisions. In either case, I believe it’s important that we build the legal framework for [holding the BOJ accountable for] inflation targeting before the next governor is appointed five years from now.
(By Alexander Martin )