TOKYO: Bank of Japan Deputy Governor Kikuo Iwata said the central bank has not shifted its focus away from the pace of money printing, contradicting the governor’s view and exposing a rift in the board on how best to break the country’s deflation shackles.
BOJ Governor Haruhiko Kuroda has said the central bank may slow the pace of money printing if it can hit its interest rate targets, set under a policy revamp in September, with fewer asset purchases. But Iwata, who is among advocates of aggressive money printing in the nine-member board, shrugged off the view the BOJ was now putting less emphasis on pumping money, stressing the bank remained committed to using both rate cuts and asset purchases as key tools to revive the economy.
“I would like to emphasise that the BOJ will continue expanding the monetary base in the future under its new policy framework,” Iwata told business leaders in Nagasaki, southern Japan, on Wednesday. “Some argue that the BOJ’s policy focus has shifted from quantity (of asset purchases) to interest rates under the new policy framework. But such an understanding is inappropriate.” The gap in view between Kuroda and Iwata, one of his two deputy governors, may complicate the BOJ’s task of communicating its policy intentions to markets as it struggles to reflate growth with its dwindling policy options.
