© Reuters. FILE PHOTO: A man walks in front of the headquarters of Bank of Japan in Tokyo, Japan, January 18, 2023. REUTERS/Issei Kato/File Photo
By Satoshi Sugiyama and Leika Kihara
TOKYO (Reuters) -The Bank of Japan’s ultra-loose monetary policy, which was aimed at “buying time” to push through structural reforms, will eventually end as inflation accelerates, Japanese industry minister Yasutoshi Nishimura said on Tuesday.
“The BOJ is sustaining monetary easing since various events (affecting the economy) occurred such as the COVID-19 pandemic and Russia’s invasion of Ukraine,” Nishimura told a regular post-cabinet news conference.
“But inflation is now accelerating. Given what’s happening across the globe, (the BOJ’s) policy aimed at buying time will eventually end and normalise,” he said.
While Nishimura is not directly in charge of liasing with the BOJ on monetary policy, he belongs to a group of ruling party lawmakers who support the reflationist policies pursued by former Prime Minister Shinzo Abe.
The BOJ’s massive stimulus programme was put in place in 2013 as part of Abe’s “Abenomics” stimulus policies aimed at pulling Japan out of deflation and economic stagnation.
“Monetary easing was a policy aimed at buying time for Japan to push through a growth strategy and structural reforms, and move back toward a growth path,” Nishimura said.
With inflation now exceeding its 2% target for more than a year, markets are rife with speculation the BOJ will soon phase out its ultra-loose policy that has been criticised by investors as distorting markets and hurting bank profits.
The BOJ is widely expected to maintain its easy policy settings at its two-day meeting ending on Friday.