The Bank of Japan is ready take up further monetary easing if necessary, though the policy decision depends largely on the outlook for economic activity and prices, BoJ Deputy Governor Kiyohiko Nishimura said Wednesday.
"The Bank is committed to implementing additional easing measures, if deemed necessary," he said in a speech before business leaders in Okayama.
However, "the Bank's policy decision depends on the outlook for economic activity and prices and on the results of the assessment of risk factors in the context of achieving the price stability goal," he added.
Nishimura said that the BoJ is mostly concerned about the uncertainties regarding the global economy, including the prospects for the European debt problem, developments in international commodity prices, and the likelihood of emerging and commodity-exporting economies maintaining growth under price stability.
Regarding the US economy, he said that the sustainability of the ongoing US recovery requires careful examination due to rising bifurcation of the labor market and possibility of some distortions in economic data after seasonal adjustment owing to effects of the Lehman shock.
The policy maker cautioned that attention should be paid to the risk that such distorted data could weaken expectations for recovery held by firms, households, and markets.
For Japan, overcoming deflation is most important and to achieve this, there is a need for continued support to enhance the level of economic activity as well as to tackle long-term structural problems.
Though it is no easy to raise the growth potential of Japan's economy when the working population is decreasing due to aging, business firms, financial institutions, the government, and the central bank should take decisive measures in their respective roles to capture new demand and lift the growth potential.
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