Reflationary BOJ board member brushes off talk of early stimulus exit
Yutaka Harada
FUKUSHIMA  Japan (Reuters) - Bank of Japan board member Yutaka Harada said on Thursday the central bank had no reason to wind back its ultra-easy monetary policy as inflation remained well below its 2 percent target.
Bank of Japan  (BOJ) board member Yutaka Harada  points at a reporter during news conference at the BOJ headquarters in Tokyo March 26  2015. REUTERS/Yuya Shino/File Photo
A vocal advocate of aggressive monetary easing   Harada  defended the BOJâs massive stimulus program  saying it was helping to reflate the economy and had kept the yen stable.
âSince the introduction of quantitative and qualitative easing (QQE) and the 2 percent inflation target  the yen has moved in a range of 100-120 yen  and appears to be roughly stable at around 110 yen â  Harada  said.
The BOJ should withdraw stimulus only after confirming that price rises have gained enough momentum for meeting its target   Harada  told business leaders in Fukushima  northeastern Japan.
âIf the current monetary policy is maintained  labor shortages will intensify further as the economy improves  and there will be a phase in which both wages and prices increase â  he  said. âIf their momentum is strong enough  the BOJ will start reducing the level of monetary easing.â
 Harada  brushed aside criticism by some analysts that delays in rolling back stimulus could destabilize the banking system  saying the merits of ultra-easy policy still outweigh the costs.
âSome people say that  because central banks in the United States and Europe are heading for the exit  Japan should follow suit â  Harada  said.
âHowever  it makes perfect sense to  me  that Japanâs exit should come later than theirsâ as inflation is still below 1 percent   he  added.
 Harada  said  he  saw no need to ramp up stimulus either  distancing  himself  from the view of board newcomer Goushi Kataoka that the BOJ should ease further to ensure its price goal is met quickly.
âWe would need to take additional easing steps if the economy is hit by an external shock and the current stimulus becomes insufficient â  Harada  told reporters after the meeting with the business leaders.
The BOJ has not reached any decisions on an exit policy for its stimulus program  but possible steps that could be taken include abandoning negative interest rates  raising the interest applied to excess reserves financial institutions park at the BOJ or selling the BOJâs holdings of government bonds   he  said.
 Harada  is considered as among those in the nine-member board who emphasize the positive impact that huge money printing could have on the economy and inflation  rather than the demerits of prolonged easing such as the hit to bank margins.
Still   he  has voted with the majority of the board including at last yearâs decision to shift to a policy framework targeting interest rates instead of the pace of money printing.
FUKUSHIMA  Japan (Reuters)  [TGT]  said on Thursday the central bank had no reason to wind back its ultra-easy monetary policy as inflation remained well below its 2 percent target.
Bank of Japan  (BOJ) board member Yutaka Harada  points at a reporter during news conference at the BOJ headquarters in Tokyo March 26  2015. REUTERS/Yuya Shino/File Photo
A vocal advocate of aggressive monetary easing    [TGT] defended the BOJâs massive stimulus program  saying it was helping to reflate the economy and had kept the yen stable.
âSince the introduction of quantitative and qualitative easing (QQE) and the 2 percent inflation target  the yen has moved in a range of 100-120 yen  and appears to be roughly stable at around 110 yen â   [TGT] said.
The BOJ should withdraw stimulus only after confirming that price rises have gained enough momentum for meeting its target    [TGT] told business leaders in Fukushima  northeastern Japan.
âIf the current monetary policy is maintained  labor shortages will intensify further as the economy improves  and there will be a phase in which both wages and prices increase â  he  said. âIf their momentum is strong enough  the BOJ will start reducing the level of monetary easing.â
  [TGT] brushed aside criticism by some analysts that delays in rolling back stimulus could destabilize the banking system  saying the merits of ultra-easy policy still outweigh the costs.
âSome people say that  because central banks in the United States and Europe are heading for the exit  Japan should follow suit â   [TGT] said.
âHowever  it makes perfect sense to  me  that Japanâs exit should come later than theirsâ as inflation is still below 1 percent   he  added.
  [TGT] said   [TGT]   saw no need to ramp up stimulus either  distancing   [TGT]   from the view of board newcomer Goushi Kataoka that the BOJ should ease further to ensure its price goal is met quickly.
âWe would need to take additional easing steps if the economy is hit by an external shock and the current stimulus becomes insufficient â   [TGT] told reporters after the meeting with the business leaders.
The BOJ has not reached any decisions on an exit policy for its stimulus program  but possible steps that could be taken include abandoning negative interest rates  raising the interest applied to excess reserves financial institutions park at the BOJ or selling the BOJâs holdings of government bonds    [TGT]   said.
  [TGT] is considered as among those in the nine-member board who emphasize the positive impact that huge money printing could have on the economy and inflation  rather than the demerits of prolonged easing such as the hit to bank margins.
Still    [TGT]   has voted with the majority of the board including at last yearâs decision to shift to a policy framework targeting interest rates instead of the pace of money printing.