Friday, November 18, 2005


BOJ Chief To End 17 Years Of 'Abnormal' Policy

Reuters has a report on the Bank of Japan. "The head of Japan's central bank, said keeping an ultra-loose monetary policy would cost the economy amid signs that the government is strongly against an early change. Toshihiki Fukui, governor of the Bank of Japan, said keeping an 'abnormal' policy for too long would bring serious harm."

"Mr Fukui was referring to the bank's quantitative easing policy. The Bank wants to end it as soon as it conquers consumer price deflation, expected around next spring. But this week, senior members of the government put public pressure on the central bank not to end quantitative easing too early."

"The end of quantitative easing could make it harder for the government to finance its huge debt burden since it would probably reduce the amount of funds available for banks to purchase Japanese government bonds."

"Mr Fukui further asserted the central bank's independence on Friday by repeating that the possibility was growing for an exit from its ultra-loose monetary policy in the year beginning April 2006."

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