Japan PM Abe aide: BOJ has further easing options

Tue Apr 9, 2013 6:27am EDT
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By Kaori Kaneko and Leika Kihara

TOKYO (Reuters) - The Bank of Japan still has options at its disposal to ease monetary policy further if needed, including boosting purchases of government bonds, exchange-traded funds and real-estate trust funds, a key economic adviser to Prime Minister Shinzo Abe said on Tuesday.

The central bank last week announced a plan to pump $1.4 trillion into the economy to jolt it from protracted deflation, and Governor Haruhiko Kuroda said the bank had taken all available steps deemed necessary to achieve the 2 percent inflation target that is the centerpiece of his policy.

But Abe adviser Koichi Hamada said there was more the BOJ could do if necessary.

"The BOJ can buy whatever amount of ETFs and REITs it can. It can even buy government bonds more forcefully, as if it were to buy the entire amount in markets," Hamada said in an interview with Reuters.

"There are also other various measures, although the BOJ must also be mindful of the drawbacks."

In the wake of the BOJ's move, the yen slipped to a four-year low against the dollar on Tuesday while Tokyo share prices have climbed to a near five-year high .N225. The BOJ's bold gamble has also sent bond yields to record lows.

Hamada, professor emeritus of economics at Yale University and one of two official economic advisers to Abe, said current dollar/yen levels are positive for Japan's export-reliant economy and appropriate judging from the country's competitiveness.

"The dollar/yen, at around 100 yen, has returned to levels around the time of the Lehman crisis. It's an appropriate level judging, as an academic, from indicators gauging each country's competitiveness such as real, effective exchange rates," he said.   Continued...

Koichi Hamada, professor emeritus of economics at Yale University and an economic adviser to Japan's Prime Minister Shinzo Abe, speaks during an interview with Reuters in Tokyo March 15, 2013. REUTERS/Toru Hanai