Reuters: US Dollar Report: UPDATE 1-BOJ policymaker says must act boldly if needed

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UPDATE 1-BOJ policymaker says must act boldly if needed Sep 5th 2012, 03:09 Tue Sep 4, 2012 11:09pm EDT * Global economic recovery may be delayed - BOJ Miyao * Warns of heightening risks to Japan's recovery * Adds exports may not pick up in time to support growth By Leika Kihara SHIMONOSEKI, Japan, Sept 5 (Reuters) - The global economy make take longer to recover and the Bank of Japan must act boldly when necessary, a central bank board member said, signalling readiness to offer further monetary stimulus if the economy's recovery prospects are threatened. Ryuzo Miyao, regarded as one of the board members who are most pessimistic about Japan's recovery, warned that risks for the world's third-largest economy were heightening due to a stubbornly strong yen and a prolonged global slowdown. Such headwinds may mean exports and output may not pick up in time to ensure a near-term recovery, he said, offering the gloomiest assessment to date by a central banker on the outlook for the export-reliant economy. "Japan's economy is expected to return to a moderate recovery but we must be mindful of the heightening risk that a pickup in global growth may be delayed," Miyao said in a speech to business leaders in Shimonoseki, in the western Japan prefecture of Yamaguchi. "The BOJ must scrutinise the outlook of Japan's economy and prices. We must also take careful and bold steps when necessary," he said. Miyao added that the central bank would proceed steadily with powerful easing, pushing money into the economy through its strategy of periodic asset purchases. Japan's economy is expected to outpace growth of other major industrialised nations with the government projecting an expansion of 2.2 percent in the current year to March 2013, as a boost from government stimulus and spending for rebuilding from last year's earthquake underpin domestic demand. While the BOJ is sticking to the view that Japan's economy will resume a moderate recovery, a growing number of central bankers are fretting that the timing of a pickup may be delayed. Miyao was the first BOJ board member to say so publicly, warning that he was more worried that Japan's economic growth and consumer inflation may undershoot the central bank's projections. "The economy as a whole is improving as a trend, but worrisome signs are increasing," Miyao said. "I'm focusing somewhat more on downside risks (to the economy)," he said. The BOJ kept monetary policy steady in August, and holds its next rate review on Sept. 18-19. BOJ officials have signalled their readiness to ease monetary policy further via increases in asset purchases, but only if risks heighten enough to derail Japan's recovery. In 2010, the BOJ created as a key monetary easing tool an asset-buying fund targeting government bonds and private assets, but not foreign bonds. It topped up the fund several times, including February and April this year, but has held fire since then. The BOJ may cut its assessment on exports and output this month if it feels that the global slowdown would last longer than initially expected, sources familiar with its thinking say, signalling its growing concern over the fate of Japan's recovery. Link this Share this Digg this Email Reprints

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