量的金融緩和 日銀がデフレ退治に動いた

The Yomiuri Shimbun (Dec. 2, 2009)
BOJ moves to combat deflationary trend
量的金融緩和 日銀がデフレ退治に動いた(12月2日付・読売社説)

The Bank of Japan has decided to launch a new quantitative monetary easing measure to fight deflation.

The central bank held an extraordinary policy meeting on Tuesday and decided to introduce a new money-easing measure to offer three-month loans to financial institutions at an ultralow interest rate of 0.1 percent.

The central bank showed its intention to overcome deflation in cooperation with the government by compiling its own additional measure before talks between Prime Minister Yukio Hatoyama and Bank of Japan Gov. Masaaki Shirakawa to be held Wednesday.

We expect the central bank to enhance its coordination with the government further and to prevent Japan from falling into a deflationary spiral--a combination of deflation and recession--with every possible measure.

The moves to supply funds to the financial system will start from early December at the rate of 800 billion yen per week. The total of injected funds will reach 10 trillion yen in three months and be increased further if necessary.

Shirakawa said at a press conference the action constitutes "quantitative easing in a broad sense." The new measure is expected to have wider monetary easing effects than the current policy of keeping the key short-term interest rate at 0.1 percent.

The Bank of Japan decided that quantitative easing needs to be enhanced to deal with the commotion in the international financial market caused by fears of a debt default in Dubai and the yen's soaring value.


Bringing yen back to earth

The government has already declared that the nation is in deflation and is planning to put forth additional economic measures, including one to cope with the strong yen, by the end of this week.

It is appropriate that the central bank's policy board hammered out the new measures in an agile manner without waiting until its next regular meeting. A further decline of the interest rate will help alleviate the rise in the yen.

However, it was regrettable to see the central bank adopt a tight money policy by terminating part of its corporate financial assistance at the end of October.

Many people may not be able to understand the true intention of the central bank in deciding on the additional money easing operation just one month later. The Bank of Japan should explain to the public in detail how it will maintain its policy of monetary easing until deflation has been overcome.


Further measures needed

Of course, an easy-money policy alone is not sufficient to combat deflation.

The business climate is improving thanks to measures stimulating consumption such as the introduction of eco points in exchange for the purchase of energy-saving home electrical appliances. However, there is concern about whether the government's decision to freeze some public works projects could have adverse effects. Drafting of next fiscal year's budget also must not be delayed.

The government's finances are in critical condition, but it may now be necessary to concentrate the budget on projects with high reflationary effects even if the government has to increase the issuance of bonds to a certain degree.

However, if the increased issuance of government bonds causes a sharp rise in long-term interest rates, the business climate will suffer strong side effects. The Bank of Japan will be required to support the government financially by buying more government bonds.

The strong yen deals a blow to exporting companies and worsens business conditions. At the same time, it increases deflationary pressures by lowering prices of imported items. The government should clarify its determination to stem the soaring appreciation of the yen.

(From The Yomiuri Shimbun, Dec. 2, 2009)
(2009年12月2日01時13分 読売新聞)

by kiyoshimat | 2009-12-02 08:47 | 英字新聞

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