- LDP policy chief Inada is neutral on BOJ’s decision Thursday
- ‘I don’t think there’s much time left for structural reforms’
Abenomics needs to accelerate its efforts on structural reforms rather than counting on further monetary stimulus to spur growth, according to the policy chief of the ruling Liberal Democratic Party.
“To me, it’s structural reforms and the growth strategy rather than monetary easing,” Tomomi Inada, chairwoman of the LDP’s policy research council, said in an interview on Wednesday in Tokyo. “I don’t think there’s much time left for structural reforms.”
Inada, 57, said she’s neutral on the Bank of Japan’s policy decision on Thursday. The LDP has no reference to monetary policy in its campaign platform for the upper-house election next month, in contrast to other recent national elections.
That’s because “the monetary policy has achieved an effect. It’s well known and so we didn’t see the need to write it down in our pledge,” Inada said.
She said she supports the central bank’s efforts to achieve its 2 percent inflation target, including the introduction of a negative interest rate. This can help people, for example, by lowering borrowing costs for housing loans, she said, but added that policy makers need to better explain how the measure works.
“I think negative rates are hard to understand,” Inada said. “Some people still think that means their bank deposits get negative interest rates.”
A Bloomberg survey of 40 economists conducted June 6-10 shows that a majority of 55 percent forecast more easing on July 29, while 27.5 percent project a change as soon as Thursday. A strengthening yen amid global economic risks also is putting pressure on the BOJ to act.
“I think foreign exchange has been stabilizing somewhat,” Inada said. “But abrupt, unstable moves are not desirable. We need to watch carefully and need to take firm action if needed.”