Japan’s Aso calls for joint monetary policy to boost inflation

© Reuters file photo: Japan’s Deputy Prime Minister and Finance Minister Taro Eso, wearing a defensive mask, delivers his policy speech at the opening of the General Assembly of the Parliament in Tokyo, Japan, January 1, 2021.

By Tetsushi Kazimoto

TOKYO (Reuters) – Japan’s finance minister Taro Eso on Tuesday called for a combination of monetary and monetary policy to help boost inflation, saying the Bank of Japan has easy economic limits to help keep inflation on track.

“We must use both inflation and monetary policy,” Eso told reporters after the cabinet meeting.

Asked to evaluate the efforts of BOJ Governor Haruhiko Kuroda, Eso made the remarks while serving as the longest-serving governor of Japan’s central bank on Tuesday.

It was rare for the finance minister to talk about monetary policy, which he usually leaves to the BOJ.

“It is true that the BOJ has not yet achieved its 2% inflation target,” Esso said. “We cannot expect inflation to rise without strong consumer demand. Only monetary policy has its limits.”

After nearly 8 1/2 years in office, Kuroda’s aggressive financial stimulus has failed to push inflation towards the elusive 2% target.

Prolonged relaxation has raised concerns about side effects such as hits on bank profits, while many analysts call the target a high order.

Japan’s main consumer inflation was stable and stopped declining in August for the first time in 13 months, reinforcing the view that inflation will not reach the target until at least 202 in Kuroda expires.

BOJ has stuck its short-term interest rate at -0.1% and yielded about 0% in its two-day rate review that ended Wednesday last week for 10-year bonds.

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