Japan isn’t setting its policies to “pander” to markets, which will swing round if the economy improves, said Japan Economy Minister Akira Amari.
“While market movements are important in themselves, the government isn’t making policy to pander to markets and should have confidence that markets will follow its policies,” Amari, 63, said today in an interview at his office in Tokyo. “If we are confident and improve the real economy, stock prices will naturally follow,” he said.
The Japanese government and Bank of Japan have faced increased swings in currency, stock and bond markets as investors react to Prime Minister Shinzo Abe’s efforts to revive economic growth. The mix of regulatory reform and fiscal and monetary stimulus known as Abenomics is aimed at lifting Japan out of 15 years of deflation.
The Nikkei 225 Stock Average has dropped almost 17 percent from a five-year peak on May 22 and is about 3 percent higher than on April 4, when Bank of Japan Governor Haruhiko Kuroda unleashed unprecedented monetary easing. The yen traded at 95.18 per dollar at 5:41 p.m. in Tokyo, more than 1 percent stronger than when the BOJ acted. Ten-year Japanese government bond yields were at 0.82 percent late today in Tokyo, after tripling from a record low of 0.315 to 1 percent.
Amari also urged the Bank of Japan to communicate clearly with financial markets, saying it should convey its reasoning “properly.” He praised steps that the central bank has taken to achieve a 2 percent inflation target.
“The BOJ will proactively make decisions, and communicate properly with markets,” Amari said. “The BOJ should continue to make an effort to properly convey its thoughts to the market.”
Minutes from the Bank of Japan’s May 21-22 policy meeting showed concerns over the bank’s communications from within the BOJ’s nine-person board. One member said the central bank’s communication about its easing plans “might be destabilizing expectations for the bond market” and increasing volatility.
Amari is currently the minister in charge of economic revitalization, reform of social security and tax, and minister of state for economic and fiscal policy. He is also leading Japan’s negotiations for entry to the Trans-Pacific Partnership, a U.S.-led regional trade agreement.
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