Governor Masaaki Shirakawa and his board should also commit to pursuing monetary easing through 2014, mirroring the U.S. Federal Reserve’s pledge to keep rates near zero, Nobuyuki Nakahara, who served on the BOJ board from 1998 to 2002, said in a statement e-mailed to Bloomberg News today. The BOJ currently buys 1.8 trillion yen ($22 billion) in government debt each month.
Some ruling Democratic Party of Japan lawmakers have called on the BOJ to do more to end deflation after it pledged to buy more government debt and introduced a 1 percent inflation target in February. Simply bolstering the size of the bank’s asset- purchase fund, its main policy tool, won’t translate into meaningful increases in monetary base or the central bank’s balance sheet, Nakahara said.
“It wouldn’t be an exaggeration to call these monetary measures a mere trick,” said Nakahara, 77, pointing out that the central bank has failed to articulate how it plans to meet its price goal or how its policies will bolster growth.
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