Bank of Japan Deputy Governor Hiroshi Nakaso said structural reforms are now required to bring the economy back on sustainable growth path.
“Monetary policy to overcome deflation and the structural reform to raise the potential growth rate must be pursued in tandem to bring Japan’s economy back on track toward sustained growth,” Nakaso told business leaders in Okinawa.
“The Bank of Japan has taken monetary easing one step further by introducing “QQE with a Negative Interest Rate,” he added.
In January, the bank unexpectedly introduced negative interest rate to achieve its 2 percent inflation target.
“I expect the original third arrow of Abenomics, the growth strategy, to fly higher and faster,” Nakaso said today.
He observed that in order to achieve sustainable economic growth, Japan’s economy inevitably should tackle the challenges to raising medium-term growth potential, on top of overcoming deflation.
Further, the banker said global financial markets have been volatile since the turn of the year, but there is no need to bee too pessimistic as the fundamentals of the Japan economy remain firm.
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