Bank of Japan board member Makoto Sakurai said the central bank will continue to buy massive amounts of government bonds even under its new policy framework targeting interest rates.
The former academic also urged the government and companies to play a larger role in pulling Japan’s economy out of subdued inflation and growth by raising wages and promoting innovation.
“There is no magic wand” to pull Japan’s economy out of the doldrums, Sakurai said in a speech on Thursday to business leaders in the city of Otsu, western Japan.
The BOJ switched its policy target to interest rates from the pace of money printing in September, after years of massive asset purchases failed to jolt the economy out of stagnation and accelerate inflation to its 2 percent target.
Some analysts interpreted the move as a sign that the BOJ would attempt to taper its huge asset purchases in the long run, amid a growing market view the central bank will run out of bonds to buy in coming years after having already gobbled up a third of the entire market.
Sakurai dismissed such views, saying that the new framework was intended to make the BOJ’s ultra-loose monetary policy sustainable.
“We will continue to buy huge amounts of government bonds to control interest rates,” he said.
Sakurai is among those on the nine-member board regarded as an advocate of aggressive money printing. But he voted for the BOJ’s decision to change its policy target to interest rates from the pace of money printing.
Sakurai said Japan’s economy was headed for a moderate recovery as global growth picked up, but warned there was a high degree of uncertainty in the world economic outlook with the policies of U.S. president-elect Donald Trump still unclear.