追加金融緩和 政府と日銀は脱デフレを急げ

The Yomiuri Shimbun (May. 1, 2012)
Govt, BOJ must expedite efforts to arrest deflation
追加金融緩和 政府と日銀は脱デフレを急げ(4月30日付・読売社説)

If the Bank of Japan simply continues taking monetary-easing measures in dribs and drabs, the country will remain without a clear prospect for defeating deflation.

The government and the central bank must step up their collaboration and work hard to restore the growth of the domestic economy.

The central bank decided to take additional monetary-easing policies, under which the total amount of its asset-purchase funds, used to purchase government bonds and other financial assets, will be raised to 70 trillion yen. This is a 5 trillion yen increase.

The measure is aimed at increasing the amount of funds circulating in the market to boost the country's economic recovery.

This is the first time since Feb. 14 that the central bank has taken additional monetary-easing measures. On the previous occasion, the bank introduced as a guideline for price stabilization a 1 percent year-on-year rise in consumer prices, making it clear it was determined to continue following easy-money policies.

The market responded favorably to the move: The average stock price of the Tokyo Stock Exchange recovered to above 10,000 for some time. The bank's decision also helped halt the yen's further appreciation against the dollar.


Bank was right to act

However, given that the measure's effects are gradually weakening, it was appropriate for the central bank to "shoot a second arrow."

This time, the Bank of Japan presented projections for the rate of year-on-year increase in consumer prices: 0.3 percent for fiscal 2012 and 0.7 percent for fiscal 2013.

Although these figures were above its projections in January, they were still below 1 percent, which the central bank has set as a gauge to arrest deflation. The central bank thus acknowledged it would be difficult to defeat deflation anytime soon--a fact that is highly significant.

If things stand as they are now, people's expectations for the country's economic recovery may fade away, shrinking the country's economic activities.

The Bank of Japan also projected that the rise in consumer prices is highly likely to reach 1 percent in the not-too-distant future, as early as in fiscal 2014. The central bank should take a step forward and express its strong determination to defeat deflation.

Of course, the government bears a heavy responsibility in this respect. Past administrations failed to take effective measures to address various key issues, including the declining population and fiscal deficits, which resulted in declines in the country's growth power. It can be said that this is the major cause for the country's prolonged deflation.

The Cabinet of Prime Minister Yoshihiko Noda set up a panel of Cabinet ministers to arrest deflation and started considering concrete measures for structural reforms of the country's economy. The move is highly commendable.


Discussions must be broad

Bank of Japan Gov. Masaaki Shirakawa also is taking part in the panel as an observer. Panel members should discuss not only monetary policies but also fiscal policies and growth strategies.

Calls have been growing for the Bank of Japan to adopt bold monetary-easing policies, mainly among Diet members with reservations about the consumption tax hike. These lawmakers argue that deflation must be stopped before the consumption tax is raised. But using such an argument as an expedient to avoid raising the consumption tax would be, we regret to say, a dereliction of their duty as politicians.

Some members of the Democratic Party of Japan and the Liberal Democratic Party are calling for revising the Bank of Japan Law. They argue the government should have the power to dismiss the central bank governor in order to pressure the bank to take anti-deflationary or other measures.

There have not yet been any substantial moves toward revising the central bank law. But excessive political interference in the operations of the central bank would bring its independence into question, reducing confidence in the bank.

Any moves that would throw the country's market and economy into confusion must be avoided.

(From The Yomiuri Shimbun, April 30, 2012)
(2012年4月30日01時18分 読売新聞)

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