“A Japanese finance official said the Bank of Japan’s policy tools are sufficient for now as a central bank board member said a new level of action is needed to counter deflation.
“The BOJ, for the time being, should stick to policy measures it has taken so far,” Vice Finance Minister Shunichi Yamaguchi said in an interview yesterday in Tokyo. Board member Takehiro Sato said in a speech today that reaching a 2 percent inflation goal will be difficult without new initiatives.
Prime Minister Shinzo Abe may seek to sweep away policy divisions as the early exit of Governor Masaaki Shirakawaaccelerates the reshaping of the central bank’s leadership. Shirakawa’s announcement yesterday that he’ll step down next month heightened investors’ expectations for aggressive steps to tackle entrenched deflation. The Nikkei 225 Stock Average surged by the most since March 2011 today as the yen slid.
“Abe will only gain momentum and public support as the yen weakens and stocks rise,” said Hiroshi Miyazaki, chief economist at Shinkin Asset Management Co. in Tokyo. “The next big focal point is the BOJ’s April meeting, when it will be important for the bank’s new leadership to show they are able to live up to Abe’s expectations.”
The yen fell to its weakest level in almost three years against the dollar and euro today, while the Nikkei closed at the highest since September 2008. At 5:53 p.m. in Tokyo the yen was at 93.74 per dollar, after earlier touching 94.06, and the Nikkei closed up 3.8 percent.
