The first reason is that monetary policy is an "equivalent exchange" of assets and what supports
BOJ buying of government bonds is mainly our bank deposits.
As mentioned, in 1998 the
BOJ had achieved full independence in terms of monetary policymaking.
The financial markets reacted to the
BOJ move, with the U.S.
Another
BOJ deputy governor nominee Hiroshi Nakaso said that the central bank faces "the best opportunity to overcome the long-standing problem of deflation and realize sustainable growth under price stability," referring to recent weakness in the yen and rising prices amid improvement in overseas economies.
But he added that he hoped the
BOJ's decision would take into account the real state of the economy, barely out of recession and mired in deflation.
BOJ observers both within and without Japan believed that more aggressive, unconventional reflationary measures were the only way for Japan to kick-start its economy.
When the non-performing loans problem emerged in the 1990s as a chronic symptom of Japan's structural woes, the
BOJ intervened to help the banks by lowering the interest rate and thereby improving banks' profit margins.
''Therefore, the
BOJ's rate increase would not have any immediately detrimental effects on East Asian economies,'' Kawai said.
Gaining the trust of
BOJ chief Masaaki Shirakawa, who will resign March 19, Nakaso has often accompanied the incumbent chief on overseas business trips, including for international conferences such as meetings of Group of 20 finance chiefs.
Criticizing the
BOJ's easing steps as "insufficient" for failing to overcome 15 years of deflation, Kuroda said the
BOJ needs to take bolder steps from the perspective of both "quantity and quality," such as buying government bonds with a longer maturity than those currently purchased, which are of up to three years.
With the yen having risen to a fresh record high against the dollar last Friday,
BoJ officials will scrutinise Asian market moves on Monday and start debating whether the potential harm from recent yen gains warrant further policy action.
So far this year, the Bank of Japan (
BOJ) has bought an estimated $20 billion, and officials have assured markets that the intervention will continue.
Like Masaru Hayami, his predecessor, the 67-year-old Fukui is a veteran
BOJ official who believes that printing money cannot substitute for thorough reforms.
The "Summary of Opinions" from the
BoJ's March meeting argued for "maintaining powerful monetary easing" in order to sustain momentum for hitting its price goals.
