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(GNN) - Former Japanese Economy Minister Heizo Takenaka said on Tuesday it would be unthinkable to debate now on an exit from the Bank of Japan's monetary stimulus as it would take another half a year to a year to see if deflation is conquered.
Takenaka, a prominent economist and member of a government advisory panel, also said Japan's growth figures for April-June could be a factor in determining whether fresh monetary stimulus would be needed, although that alone would not be a trigger.
"Exit is still far off," Takenaka told Reuters shortly before the BOJ decided to leave its massive monetary stimulus steady.
"We must pull consumers and investors out of a deflationary mindset by conquering deflation," said Takenaka, a Keio University professor who was considered a reformist when he was Junichiro Koizumi's economy minister from 2001-2005.
In recent months, the BOJ has begun informal discussions on how to prepare for the exit from the massive easing, current and former central bankers familiar with internal discussions have told Reuters.
In public, however, Kuroda has insisted it is too early to discuss exit strategies.
Contrary to Japanese policymakers' view, Takenaka said the economy is not on track yet although it is improving.
"It is getting better than before ... but we cannot yet say it's on track. It's going in the right direction but still insufficient in terms of absolute level," he said, noting that Tokyo share prices now are below their levels when Prime Minister Shinzo Abe was in power in his first term in 2007.
Takenaka expressed concern about a bigger-than-expected decline in household spending in May.
He said he wants to see whether consumer spending recovered in June and how sharply economic activity slumped in the second quarter following the April 1 sales tax hike.
"April-June GDP figures most likely turned out negative but to what extent ... would be one factor for judging" the need of additional monetary stimulus, Takenaka said.
He said the BOJ was unlikely to change policy on the basis of second-quarter gross domestic product (GDP) data alone.
(Reuters)(GNN - AIP)(Reporting by Tetsushi Kajimoto; Editing by William Mallard & Kim Coghill)
Takenaka, a prominent economist and member of a government advisory panel, also said Japan's growth figures for April-June could be a factor in determining whether fresh monetary stimulus would be needed, although that alone would not be a trigger.
"Exit is still far off," Takenaka told Reuters shortly before the BOJ decided to leave its massive monetary stimulus steady.
"We must pull consumers and investors out of a deflationary mindset by conquering deflation," said Takenaka, a Keio University professor who was considered a reformist when he was Junichiro Koizumi's economy minister from 2001-2005.
In recent months, the BOJ has begun informal discussions on how to prepare for the exit from the massive easing, current and former central bankers familiar with internal discussions have told Reuters.
In public, however, Kuroda has insisted it is too early to discuss exit strategies.
Contrary to Japanese policymakers' view, Takenaka said the economy is not on track yet although it is improving.
"It is getting better than before ... but we cannot yet say it's on track. It's going in the right direction but still insufficient in terms of absolute level," he said, noting that Tokyo share prices now are below their levels when Prime Minister Shinzo Abe was in power in his first term in 2007.
Takenaka expressed concern about a bigger-than-expected decline in household spending in May.
He said he wants to see whether consumer spending recovered in June and how sharply economic activity slumped in the second quarter following the April 1 sales tax hike.
"April-June GDP figures most likely turned out negative but to what extent ... would be one factor for judging" the need of additional monetary stimulus, Takenaka said.
He said the BOJ was unlikely to change policy on the basis of second-quarter gross domestic product (GDP) data alone.
(Reuters)(GNN - AIP)(Reporting by Tetsushi Kajimoto; Editing by William Mallard & Kim Coghill)
