Roach Sees Abe’s Unlimited Easing Failing to Push Japan Recovery

Japanese opposition leader Shinzo Abe is focusing on the wrong tool for boosting the economy by urging unlimited monetary easing, according to Stephen Roach, former non-executive chairman for Morgan Stanley Asia.

“Quantitative easing, which they should have learned long ahead of everybody, doesn’t help drive a cyclical recovery,” Roach, 67, said today in a Bloomberg Television interview in Hong Kong. “What he wants he may get, but that doesn’t mean it’s going to work.”

Abe is pressing for more action to end deflation and boost an economy in its third recession in five years, including urging a 2 percent inflation target, up from the central bank’s existing 1 percent goal. JPMorgan Chase & Co. forecasts a 10 trillion yen ($119 billion) expansion of the Bank of Japan (8301)’s asset-purchase program at a meeting that ends on Dec. 20, four days after the election.

“Weak, recovering economies are vulnerable to relapses -- that’s the bottom line,” said Roach, who lectures at Yale University in New Haven, Connecticut, including teaching a course on economic policy lessons from Japan.

To contact the reporters on this story: James Mayger in Tokyo at jmayger@bloomberg.net; Susan Li in Hong Kong at sli31@bloomberg.net; Rishaad Salamat in London at rishaad@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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