Reports the Financial Times on comments from Yale University professor Koichi Hamada (one of the main architects of Abe’s economic revival programme):
- Called for the Bank of Japan to take action “within one or two months” of next week’s increase in consumption tax, if data were to indicate that consumers were struggling to cope with the fiscal squeeze
- This suggests that BoJ governor Haruhiko Kuroda may come under pressure from the government to present new easing measures if momentum fades in the wake of the tax hike
“If statistics such as spending data show weakness after the tax increase, then the BoJ should act quickly to implement more powerful monetary policy,” said Prof Hamada.
These are not surprising comments from Hamada, he is a staunch proponent of BOJ easing and has been opposed to the sales tax hike.
“I always think stronger medicine has stronger side-effects, so the BoJ, like all central banks, should try and calculate the risks. But even if bigger buying of bonds or other assets disturbs or interferes in private activities, the central bank should do it, if it really has to.”
Abe adviser warns on impact of tax hike the Financial Times (gated, but can be read with a free registration)
