Bank of Japan Deputy Governor Amamiya said that the Bank of Japan does not need to modify its ultra-loose policy Reuters

© Reuters. File photo: During the Coronavirus Disease (COVID-19) outbreak in Tokyo, Japan on May 22, 2020, a man wearing a protective mask stands in front of the Bank of Japan headquarters. REUTERS/Kim Kyung-Hoon/File Photo

Author: Kihara Lycra

TOKYO (Reuters)-The Bank of Japan Deputy Governor Masakazu Amamiya said on Wednesday that there is no need for the central bank to adjust its ultra-loose policy when inflation is “far below” its 2% target.

Amamiya said that although the Japanese economy may recover more significantly next year as supply constraints recede, the spread of Omicron’s new COVID-19 variant casts a shadow over the outlook.

However, he said in a speech that weak price growth means that Japan is facing a different situation from the United States and Europe. In the United States and Europe, rising inflation has increased the chances of easing ultra-loose monetary policy.

“Given the price situation in Japan, you can see that the Bank of Japan does not currently need to revise its large-scale monetary stimulus plan,” Amemiya said.

However, Amemiya said that even in Japan, inflationary pressures are gradually increasing, and more and more companies are able to pass on higher costs to consumers.

He added that improvements in corporate financing conditions are also expanding, making it easier for companies to issue corporate bonds and commercial paper.

“Corporate financing conditions are improving overall, but they are still severe for some small companies,” Amemiya said.

“We will make appropriate decisions based on the development of corporate financing, including the Bank of Japan’s December Tankan Business Confidence Survey,” he said.

The Bank of Japan stepped up its purchases of corporate bonds and commercial paper last year and launched a loan program aimed at sending funds to small businesses through financial institutions in response to the cash crunch caused by the pandemic.

The recent spread of new variants of Omicron complicates the Bank of Japan’s decision, which is expected to be made as early as next week in the interest rate review to phase out these plans when they reach the current deadline in March 2022.

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