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Bank of Japan Governor Haruhiko Kuroda stepped into the global debate on the need for governments to do more heavy lifting to support their economies, saying that the ultra-low interest environment created by Japan’s central bank makes fiscal spending more powerful.
Kuroda said Tuesday that the BOJ wasn’t planning to add to its stimulus in tandem with some form of government spending package, but acknowledged that a policy mix was more effective in stimulating prices and the economy than the central bank acting alone.
“If fiscal policy becomes more aggressive with interest rates at appropriately low levels and continued easing in place under the current yield curve control policy in an overall policy mix, fiscal policy will be more effective,” Kuroda said at a press conference in Nagoya.