The Bank of Japan (BoJ) is likely take bold monetary easing action next month, the Wall Street Journal cited an adviser to Prime Minister Shinzo Abe as saying.
The adviser, Etsuro Honda, rejected speculation that the central bank may use a policy review in September to justify a paring back of its stimulus, the paper said.
“However they conduct the assessment, there is already an answer: Monetary policy hasn’t been eased enough,” Honda was quoted as saying in an interview.
Without further action, people will give up on the Abenomics drive to defeat deflation, he said.
The comments came as BoJ’s planned “comprehensive assessment” of its policies has generated speculation over the direction of Abe’s three-and-a-half year effort to end deflation, the Journal noted.
The central bank announced the review at its previous board meeting in late July, when policymakers took modest easing action.
If the BoJ starts to rein in its stimulus after the review without achieving its 2 percent inflation target, Japan will never be able to get out of deflation, Honda said.
Given the situation, there is “more than a 50 percent possibility of bold monetary easing measures” next month, he said.
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