The International Monetary Fund on Wednesday urged Japan to maintain its massive monetary support measures to support consumer prices, according to a member of the central bank's board of directors, thereby strengthening its policy of ;anticipation.
IMF Managing Director Christine Lagarde said Bank of Japan Governor Haruhiko Kuroda was doing the right thing by pledging to keep the money open until the end of the year. Inflation is reaching its ambitious target of 2%.
Critics are increasingly criticized because the BOJ's massive purchases of assets are skewing markets and pushing Tokyo stock prices – which hit their 26-year high this week – beyond levels justified by economic fundamentals.
"One of the central bankers' strengths is to be very clear in their communication and determined in their resolution, which Governor Kuroda has clearly demonstrated," Lagarde told Reuters on Wednesday.
While inflation is far from its target, the Bank of Japan said it would not recall its huge boost even as its US and European counterparts see a policy exit mode crisis.
The BOJ board member, Yukitoshi Funo, also defended Wednesday the bank's huge asset purchases, stating that he did not see the need to slow down his purchases of exchange-traded funds (ETFs) of 6 billion yen per year. .
"Stock prices are not overheating," Funo said at a news briefing in Miyazaki, southern Japan, adding that he was "very supportive" that the courts actions have increased so much.
Kuroda was increasingly called for more transparency on how the BOJ could recall stimulus measures. Many market players believe that he could be reappointed after the end of his five-year term in April.
While Funo, a former auto executive, ruled out the possibility of an immediate withdrawal of stimulus measures, he said that the Bank of Japan should be vigilant in the face of the threats posed by the government. prolonged monetary easing.
"We do not assume that we will not make any changes to our different policy tools until 2% inflation is reached," he said, leaving room for further refinement some parts of the frame before the others. ]
The comment reflects a growing point of view within the BOJ that its next move should be to reduce, not increase, its stimulus given the rising cost and diminishing returns of the program, although there is differing opinions on how and when the policy should be changed.
Lagarde said the divergent political trajectories of the major central banks have not led to massive and disruptive capital outflows in Asia, thanks to the cautious approach and clear communication from bankers central to their policy changes.
"We believe that these conditions can help to ensure that monetary policy changes do not cause unnecessary capital movements," she said.
As part of a policy adopted last year, the BOJ now directs short-term interest rates to minus 0.1% and the yield of government bonds at 10 years around 0%. It also buys government bonds and riskier assets, including ETFs.