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- BoJ would back government stimulus in October - ex-official
BoJ would back government stimulus in October - ex-official
The Bank of Japan would offer support for a government spending package likely to be unveiled in October when a national sales tax is increased, according to a former central bank official.
The move would have symbolic importance, showing the central bank and government working in tandem to support the economy as it faced the additional risk of the higher tax hitting consumption, Hideo Hayakawa, a former executive director at the BOJ, said.
The BOJ support would likely take the form of a commitment to buy up extra bonds issued to pay for the government stimulus rather than a change of policy settings, he added. The central bank has plenty of room to expand its purchases of government debt after scaling back its buying to well below half an 80 trillion yen annual target.
Hayakawa’s view is that Japan’s economy is holding up better-than-expected despite slowing global growth exacerbated by U.S.-China trade tensions and a downturn in the tech sector. While the BOJ will want to show its commitment to maintaining its stimulus for longer, the health of the economy doesn’t dictate a need to take further action.
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