Tuesday, March 5, 2013
DJ: Iwata Says BOJ Should Take Bolder Steps To Hit 2% Target In 2 Yrs
TOKYO--One of the government's nominees for deputy governor of the Bank of Japan said Tuesday the BOJ should take bolder easing steps, including purchases of longer-term bonds, to achieve a 2% inflation target in two years.
"The BOJ should proceed with quantitative easing more than so far ... with its own full responsibility of achieving a 2% target," university professor Kikuo Iwata said at a confirmation hearing committee of the lower house of parliament.
In surprise remarks, Mr. Iwata, who hasn't been approved by parliament for the post, vowed to step down if the 2% target isn't met within two years after he is approved as one of two BOJ deputy governors.
"The best way to take responsibility is to step down from the post," Mr. Iwata said.
He added that he was open to the controversial idea of foreign-bond purchases by the BOJ, although there was no need to introduce the measure for now.
Referring to the possibility of revising the BOJ law, Mr. Iwata said a law change "would make it easier for the BOJ to achieve the 2% target."
Mr. Iwata is seen as an opinion leader among critics of the BOJ, but is seen as a radical figure by those who support the status quo. Now 70 years old, he has consistently found fault with the central bank's policies since the early 1990s, including its failure to achieve price goals and its supposed underestimation of the power of monetary policy.
Investors have been parsing comments by the nominees for the BOJ's most senior posts for clues to how aggressively they will move to uproot Japan's 15 years of deflation--a task Prime Minister Shinzo Abe has called the top priority of his administration.
At a parliamentary hearing Monday, BOJ governor nominee and current Asian Development Bank chief Haruhiko Kuroda pledged to "do everything possible" to get Japan's economy out of its deflationary state and hit a 2% inflation target in around two years. Mr. Kuroda listed policy options for the BOJ that included buying more and longer-dated government securities and bringing forward the central bank's planned switch to an open-ended asset-purchase program.