- Kozo Yamamoto says Japan needs fiscal, monetary boost
- BOJ should ease sooner rather than later, lawmaker says
Japan needs a fresh, double-dose of stimulus to counter mounting signs of economic weakness, according to one of the key members of Prime Minister Shinzo Abe’s brains-trust of pro-reflation advisers.
The government should assemble a 10 trillion yen ($92 billion) fiscal package, and the central bank should add the same amount to its already unprecedented easing program, ruling Liberal Democratic Party lawmaker Kozo Yamamoto said Wednesday.
Speaking in a recording for a program to be broadcast on the BS11 channel, Yamamoto said the fiscal package should include increased benefits for families with children. As well as boosting its purchases of Japanese government bonds, he said the Bank of Japan should buy more exchange-traded funds and other riskier assets.
The extra monetary stimulus should come sooner rather than later, Yamamoto told reporters after the recording. The central bank’s board meets April 27-28. His view on the world’s third-largest economy chimes with BOJ board member Yutaka Harada, who on Wednesday didn’t rule out further easing, saying that Japan’s recovery was weak and prices don’t seem to be rising.
Yamamoto, who has advised Prime Minister Shinzo Abe and heads a study group of his so-called Abenomics policies, also urged the premier to at least postpone a sales-tax increase currently planned for next year. Earlier this month he said a case could be made for even cutting the levy.
The International Monetary Fund on Tuesday slashed its forecasts for Japanese growth for this year and next. The IMF predicts an economic contraction next year if Japan goes ahead with the tax hike. Meanwhile, the BOJ’s main price gauge has been stuck around zero since mid-2015, even with massive monetary stimulus aimed at stoking inflation.
One option under discussion among LDP officials is announcing a fiscal stimulus package and what would be a second delay for the consumption-tax increase after meeting of Group of Seven leaders in Japan May 26-27.