KOCHI, Japan (Reuters) - Bank of Japan policymaker Yoshihisa Morimoto on Wednesday reassured markets of the central bank’s resolve to push on with monetary easing as a weaker yen and a pick-up in global demand look to be boosting the export-reliant economy.
Morimoto, a former utility executive, said the government also had a role in beating deflation, such as through deregulation and reforms to encourage more investment in new business areas.
“Recent exchange-rate moves will likely underpin exports and corporate revenues,” Morimoto told business leaders in Kochi, western Japan, reiterating the BOJ’s view the economy would recover as overseas growth picked up.
“The BOJ will continue to promote powerful monetary easing through steps including massive government bond purchases.”
The world’s third-largest economy has contracted for three consecutive quarters. Prime Minister Shinzo Abe, who won office in December, is pressuring the central bank to take bolder action to revive growth and end two decades of inflation.
Abe’s push for fiscal stimulus and radical monetary easing has knocked the yen to 33-month lows against the dollar, helping underpin a stock market rally to 4-1/2 year highs.
In January, the BOJ doubled its inflation target to 2 percent and made an open-ended pledge to buy assets from next year.
Two of the BOJ’s nine-member board opposed the new inflation target, arguing that it far exceeded levels deemed sustainable and would not have much impact on expectations, minutes of the January meeting showed.
On Tuesday, Morimoto toed the central bank’s official line, saying core consumer inflation was likely to approach 1 percent in the fiscal year ending March 2015, and may rise further if efforts to boost growth succeeded.
Any price rises must be accompanied by increase in wages to be sustainable, said Morimoto, who has always voted with the majority since joining the BOJ board in 2010.
“Prices must rise as a result of a sustained, balanced improvement in the economy accompanied by increases in jobs, wages and corporate revenues. That’s our definition of price stability,” he said.
Reporting by Leika Kihara; Editing by Shinichi Saoshiro and John Mair