Bank of Japan to maintain ultra-flexible measures despite gov’t change

Tokyo, Sep 30 (EFE).- Bank of Japan Governor Haruhiko Kuroda said Thursday that the entity would maintain its ultra-flexible monetary policy regardless of economic measures the imminent Japanese Prime Minister Fumio Kishida decides to implement. .

The head of Japan’s central bank said it would continue to apply its monetary stimulus strategy until it reaches its inflationary 2 percent objective as stated in its mandate, during a virtual forum organized by the European Central Bank.

“Whatever the type of fiscal, regulatory or other policy of the new government, we at the Bank of Japan will continue to maintain our extremely accommodative monetary policy to reach the price stability target of 2 percent as soon as possible,” Kuroda said.

“That is our mandate and it is not likely to change,” said Kuroda, in office since 2013 and appointed under the government of Shinzo Abe. Kuroda coordinated with the bank an ambitious monetary stimulus strategy, state investment and structural reforms that have not yet been successful.

Following difficulties to reach the desired annual inflation rate due to the internal and external factors such as the fall in oil prices or the Covid-19 pandemic’s impact, the bank was repeatedly forced to delay the achievement period and activate additional measures.

“In the future, in the next few years, we must achieve price stability at 2 percent. But right now, economic recovery and faster growth is the most important challenge we face,” Kuroda said.

The price rise in Japan has been stagnant for months, unlike the acceleration in inflation seen in the United States and the European Union. In August, the consumer price index in the country remained flat compared to the previous month.

Kishida, elected new leader of the ruling party Wednesday and expected to be sworn in Monday as prime minister, has spoken out in favor of continuing the inflationary target, as well as maintaining aggressive monetary policy.

However, he said he would change the course of “neoliberal policies” Japan has been applying for decades, with a view to seeking a more equitable wealth distribution.

It remains to be seen, once Kisihida agrees with his new government cabinet, if his team will significantly modify the economic strategy known as “Abenomics” in force for almost nine years.

Kishida must call a general election before the end of November, when the current parliamentary term will end, an election in which the ruling party is expected to revalidate its majority. EFE

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