26 March 2002, 09:52 Hayami seeks end to zero-rates soonest; must keep policy til deflation over
TOKYO (AFX-ASIA) - Bank of Japan governor Masaru Hayami said the
central bank has committed itself to maintain its current easy monetary
policy until deflation ends, though he wants to end the zero-rate
policy at the soonest.
"We want to exit the current zero interest-rate situation as soon
as possible but at this stage we are promising to continue monetary
easing until growth in prices returns to around zero," Hayami told a
parliamentary panel.
Meanwhile, Hayami said he does not agree that government spending
is "crowding out" private investment, as domestic interest rates in
real terms remain at historically low levels, though spending should be
carefully directed.
"I think real long-term interest rates remain at historically low
levels, so I don't think increased government spending is crowding out
private-sector investment," he said.
"The government should revise its spending structure, on top of
monetary easing, so private-sector demand will emerge. It needs to
reconsider the type of spending on public works project to boost
private demand."
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