BoJ given green light on policy change
The Japanese government yesterday gave the Bank of Japan a green light to end its unorthodox, ultra-loose monetary policy whenever it sees fit, ending months of sparring between politicians and the central bank.
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Junichiro Koizumi, prime minister, indicated that his government would not interfere in the timing of any move. Under quantitative easing, the policy introduced in 2001, the BoJ floods the market with excess liquidity.
Until yesterday, most had thought the government would object if the BoJ moved swiftly to alter monetary policy.
Mr Koizumi said: "The government and the BoJ are trying in concert to move the economy out of deflation. The question of what measures are needed in accordance with this policy is a matter for the BoJ to decide."
The prime minister's remark bolsters the central bank's independence - granted in 1998 - and clears the way for the bank to start mopping up liquidity as early as March or April.
Even if it begins to reduce liquidity, it is not expected to raise rates for several months.
The BoJ will hold three board meetings between now and the end of April, the first of which is next week. On Friday, the core consumer price index (CPI) for January will be released.
It could show a rise of up to 0.4 per cent, potentially strengthening the bank's case that deflation is over.
Until recently, senior politicians were threatening the central bank with the loss of its independence should it seek to dismantle quantitative easing too quickly.
Paul Sheard, economist at Lehman Brothers, said Mr Koizumi's statement marked "a very significant shift in the wind". Strong data, such as annualised real growth of 5.5 per cent in the fourth quarter, had also convinced the government that economic recovery was robust.
However, Mr Koizumi yesterday stressed the government's official position that the economic climate re-mained mildly deflationary, which was interpreted as a warning to the central bank to tread carefully.
The prime minister's view stands in contrast to that of Kaoru Yosano, his increasingly influential economy minister, who has declared serious deflation "a thing of the past".
Mr Yosano said it was important for Japan to return to a more orthodox monetary policy.
"The zero-interest rate policy is abnormal," he said.
The government had until recently insisted that the BoJ broaden its definition of price changes beyond the core CPI, which is judged to overestimate inflation. It said the bank should also consider the gross domestic product deflator, a broader measure that indicates Japan is still in deflation.
Mr Sheard said the government had in effect dropped that line.
With the GDP deflator off the table, the Bank of Japan could probably make a case that its three conditions for ending quantitative easing had been met, some analysts said.
日本政府准许央行择时改变货币政策
日本政府昨天给日本央行(Bank of Japan)开了绿灯，准许后者在合适的时候结束异常宽松的非正统货币政策，从而为政界与央行之间持续数月的争吵划上了句号。
日本首相小泉纯一郎(Junichiro Koizumi)表示，他的政府将不会对央行任何行动的时机选择进行干涉。日本央行在2001年出台“定量宽松”(quantitative easing)货币政策，向市场投放过量流动资金。
直到昨天之前，大部分人都认为，如果日本央行迅速采取措施改变货币政策，政府将会反对。
小泉先生说：“政府与央行正共同努力，试图让经济摆脱通货紧缩。按照这一政策，需要采取哪些措施，这一问题由央行决定。”
首相的言论支持了1998年授予日本央行的独立性，并为央行着手削减流动资金扫清了道路。央行最早可能在3月或4月采取行动。即便日本央行开始削减流动资金，预计几个月内它也不会升息。
从现在到4月底，日本央行将举行3场央行政策委员会会议，其中第一次会议将在下周召开。日本一月份的核心消费价格指数将于周五公布，可能出现多达0.4%的升幅，可能会使央行更有理由认为通缩已经结束。
直到最近，一些高层政界人士一直在威胁央行说，如果它寻求过快终止定量宽松政策，将剥夺它的独立性。
年率5.5%的第四季实际经济增长率等强劲的经济数据，也令政府确信，经济复苏颇为有力。
但小泉昨天强调，政府的正式立场是，经济气候仍然是温和通缩，此话被解读为促使央行小心行事的警告。
