追加金融緩和 政府・日銀は効果的な連携を

The Yomiuri Shimbun (Nov. 1, 2012)
Govt, BOJ must cooperate effectively on monetary policy
追加金融緩和 政府・日銀は効果的な連携を(10月31日付・読売社説)

The government and the Bank of Japan are clearly strengthening their cooperation in tackling deflation. What they must do now is implement effective policies.

The central bank has decided to take additional monetary steps, including a boost to 91 trillion yen, up 11 trillion yen, in its fund to buy government bonds and other financial assets. The bank also hammered out a new system to provide funds at low interest rates to banks that have increased lending. It said it would refrain from setting an upper limit on lending to ensure an ample supply of funds.

Due to slowdowns in overseas economies and the deterioration of Japan-China relations, the nation's economy has started to cool off. The Bank of Japan was wise to take additional steps for the second consecutive month to prevent the economy from worsening.

Previous increases in the central bank's fund have not been effective in pumping sufficient funds into companies and other entities. We hope the new system will be more productive in increasing bank lending.


Joint statement important

For the first time, the government and the Bank of Japan issued a joint statement saying they would "work together and make utmost efforts" to overcome deflation.

Seiji Maehara, state minister for economic and fiscal policy, who attended the central bank's monetary policy-setting meeting, stressed at a press conference that the statement was an important step forward in combating deflation. It is essential that the touting of cooperation between the government and the central bank does not end up as empty talk.

The central bank decided to take the additional measures--including introduction of the new system--apparently because it feared its projection of overcoming deflation "as early as fiscal 2014, in the not-too-distant future" was not feasible.

On the same day as the announcement of additional monetary steps, the Bank of Japan forecast that consumer prices would increase 0.8 percent in fiscal 2014, below the 1 percent yardstick for overcoming deflation.

The consumption tax rate is scheduled to be raised to 8 percent in April 2014. Efforts must be accelerated to overcome deflation through all available measures, so no obstacles will be thrown in the way of integrated reform of social security and tax systems.


Nurture new industries

Some government officials and lawmakers from the ruling and opposition parties have called on the Bank of Japan to purchase foreign bonds to correct the yen's appreciation and to introduce an inflation target. The government and central bank should further deepen their discussions on these matters.

It is primarily the government's task to address structural problems, such as the shrinking population, declining potential growth rate and industrial hollowing-out. The small emergency economic measures decided by the Cabinet last week are far from satisfactory.

We hope new industries will be nurtured in such growth areas as nursing care and medicine as well as environment-related industries to accelerate the creation of jobs.

It also is necessary to support economic revitalization by securing a stable supply of electricity through the reactivation of nuclear power plants after their safety has been confirmed.

More importantly, a bill to enable the government to issue deficit-covering bonds, which will secure resources for this fiscal year's initial budget, should be passed by the Diet as soon as possible. If state coffers become depleted and administrative functions suspended, sudden and severe deflationary pressures will deal the Japanese economy a deadly blow. Such confusion must be avoided.

(From The Yomiuri Shimbun, Oct. 31, 2012)
(2012年10月31日01時16分  読売新聞)

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