Bloomberg News

Japan Cabinet’s Ishida Doesn’t Expect More Central Bank Easing Tomorrow

March 12, 2012

A pedestrian walks past the Bank of Japan headquarters in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg

A pedestrian walks past the Bank of Japan headquarters in Tokyo, Japan. Photographer: Kiyoshi Ota/Bloomberg

The Bank of Japan (8301) is unlikely to unveil additional economic stimulus tomorrow after expanding monetary stimulus in February, said Katsuyuki Ishida, who attended last month’s meeting as a government representative.

“I doubt this time will be like the last,” Ishida, vice cabinet minister for economic policy, said in an interview today in Tokyo. “My understanding is that there will probably be more easing ahead if the policies don’t produce results.”

Ishida’s comments indicate less political pressure on the central bank this month and 12 of 14 economists surveyed by Bloomberg News expect Governor Masaaki Shirakawa to keep monetary policy unchanged. The BOJ unexpectedly expanded its asset purchase program by 10 trillion yen ($122 billion) and set an inflation goal of 1 percent last month, a move triggered by politicians’ calls for a more aggressive stance to spur the economy, according to analysts.

The BOJ “has stepped up toward its goal” of ending deflation, said Ishida, a member of a ruling Democratic Party of Japan lawmaker group that has called on the BOJ to take more aggressive measures in fighting deflation. “I want them to achieve their goal as soon as possible.”

Economic Policy Minister Motohisa Furukawa and his deputies told the central bank prior to the monetary policy meeting last month that it needed to take additional steps to end falling prices, Ishida said. Goldman Sachs Group Inc. and Credit Suisse AG said political pressure was a key factor in causing the central bank to add stimulus on Feb. 14.

The BOJ will probably conclude tomorrow that it needs to monitor the impact of its monetary stimulus as the state of financial markets is improving, while also watching out for oil prices and the European debt crisis, said Ishida, 57.

Differing Views

Some analysts share a different view. The Bank of Japan will expand monetary stimulus tomorrow to show a commitment to ending deflation, according to Hiromichi Shirakawa, chief Japan economist at Credit Suisse and the only analyst who predicted last month’s easing.

Recent economic reports indicate that Japan’s economy is rebounding from a contraction last quarter. Machinery orders rose 3.4 percent in January, a report showed today, adding to the recent positive industrial production and retail sales data which all beat economists estimates.

The yen traded at 82.37 against the dollar as of 1:58 p.m. in Tokyo, after touching 82.65 last week, the highest since April 27. The yen’s decline from a postwar high of 75.35 yen helped the Nikkei 225 Stock Average (NKY) touch 10,000 last week for the first time since August.

To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net


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