Business

BOJ deputy governor calls for fiscal support to ease energy inflation burden

By Megumi Fujikawa

Bank of Japan Deputy Governor Masazumi Wakatabe said Wednesday that both monetary easing and fiscal expansion are needed to simultaneously cope with higher commodity prices and Japan’s low inflation.

“As energy and food price increases are mainly driven by external cost-pushing factors, it is desirable to respond with measures other than monetary policy aimed at managing aggregate demand,” Mr Wakatabe said in a speech.

“Possible options are fiscal policy and energy policy to reduce dependence on oil and gas,” he said, adding that the central bank will continue its dovish policy and should not rule out the possibility of additional easing if the economy weakens.

The deputy governor also said medium- to long-term inflation will still rise only moderately in Japan, where he believes there are “scarring effects of prolonged deflation.”

 

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com

https://www.marketwatch.com/story/boj-deputy-gov-calls-for-fiscal-support-to-ease-burden-of-energy-inflation-271654048952?rss=1&siteid=rss BOJ deputy governor calls for fiscal support to ease energy inflation burden

Brian Lowry

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