BOJ’s Nishimura urges unconvention
TOKYO - Reuters
The Bank of Japan’s Deputy Governor says growth can be stimulated with unconventional steps. AFP photoCentral banks of advanced economies, including Japan, have exhausted traditional monetary policy options during the global financial crisis, but still have room to stimulate growth with unconventional steps, a Bank of Japan deputy governor said.
Structural problems such as an ageing population and severe balance-sheet adjustments after the collapse of Lehman Brothers will mean a period of low-trend growth will persist and make advanced economies more vulnerable to occasional downside shocks, said BOJ Deputy Governor Kiyohiko Nishimura.
“Central banks face enormous challenges, particularly those in advanced economies,” he said on Aug. 27 at an event hosted by the Turkish Central Bank.
Having stepped in to halt a contagious disruption in global financial markets after the Lehman crisis, central banks have exhausted traditional policy options, he said.
“These central banks, including the Bank of Japan, are pursuing the most unconventional policies ever imagined. There is still room in this direction for further easing of monetary conditions to support the economy,” he said, according to the text of the speech released on the BOJ’s website yesterday.
Nishimura did not elaborate what specific measures were available for central banks in the speech, which focused on how demographic changes and balance-sheet adjustments could affect post-crisis growth in advanced economies.
The former economics professor also countered the view held by many U.S. academics that growth in the U.S. can return to pre-crisis levels in a relatively short time if steps to jump-start demand are taken.
The U.S. economy is not rebounding as rapidly as in previous business cycles and emerging economies are “now visibly slowing down,” suggesting that structural problems will keep these economies under a prolonged period of sluggish growth, he said.