(June 10 Bloomberg) An influential adviser to Prime Minister Shinzo Abe said the Bank of Japan should bolster monetary stimulus as soon as next week, but stick to its main tool of government bond purchases for now rather than opt for a more negative benchmark interest rate.
"It's better for the BOJ to act as soon as possible," said Nobuyuki Nakahara, an intellectual father of the BOJ's first stab at quantitative easing in 2001, when he was on the bank's board. he said action now would dovetail well with fiscal policy, in the wake of Abe's decision to delay a 2017 sales-tax rise that would have put a drag on the economy. "The BOJ should sound a signal gun by adding more stimulus."
Nakahara said in an interview Friday that the BOJ should expand its bond buying target by 20 trillion yen ($187 billion), bringing it to 100 trillion yen a year. That's because the purchases have been the main pillar for monetary easing under Governor Haruhiko Kuroda, he said. Policy makers should avoid cutting the negative benchmark rate for now, as the central bank is still examining the impact of that too, he said.
Click on the link below to see the full story from Bloomberg: (by Toru Fujioka and Masahiro Hidaka)