Bank of Japan Board Nominee Seiji Adachi in His Own Words
Bank of Japan Board Nominee Seiji Adachi in His Own Words
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Seiji Adachi, the economist chosen by Prime Minister Shinzo Abe to join the Bank of Japan’s policy board, is a full-fledged reflationist who says the central bank has plenty more work to do.
The 54-year-old head of economic research at Marusan Securities was nominated by the government Tuesday to replace another known reflationist, Yutaka Harada. The two economists co-authored with others a book on reflating Japan that was published shortly before the launch of the BOJ’s massive easing program in 2013.
According to Adachi’s published comments, he lauds the power of quantitative easing and would prefer to expand the BOJ’s stock fund buying rather than lowering negative rates further if more action is required to achieve the bank’s inflation goal.
Here are some of Adachi’s views that he has penned in his column for Money Gendai, an online media site run by major Japanese publisher Kondansha Ltd.:
On Quantitative Easing
“It would be outrageous to take the stance that ‘the current monetary easing is not having an effect, and thus we should stop both our negative rates and quantitative easing policy’ -- in other words, the argument that monetary policy is ineffective.”
“We are still in the process of escaping deflation, and since the introduction of quantitative and qualitative policy monetary policy has been effective in escaping deflation... from a policy perspective we have to be careful that this positive flow is not stopped.”
On Cutting Negative Rates
“As for cutting negative rates further, the likelihood is low that it would result in another strengthening of the yen similar to the path taken in 2016, but its effectiveness would be severely limited.”
“If financial institutions start buying super-long term bonds under the assumption that their profit environment will further deteriorate, there’s a risk that super-long term yields such as those on 20-year bonds would sharply decline.”
On ETF Purchases
“Under the current environment where the labor market recovery is continuing, it may be better to add to quantitative easing by means such as raising the ETF purchasing target, even if it isn’t by much.”
On MMT
In the years leading up to World War Two, “MMT-like economic policies were adopted and the world economy seemed to succeed in recovering from the Great Depression. But in the end, the world came up against a wall of production capacity (specifically resources such as raw materials) and was unable to control inflation.”
“It’s problematic that there’s hardly any explanation of the mechanism for determining prices.”
On Abenomics
“I value the fact that so far Abenomics has changed the direction of the Japanese economy away from a deflationary spiral toward escaping deflation -- though it still has some ways to go. It’s not at a stage where we can give it a score and a final assessment. I believe the final judgment on Abenomics will depend on how things proceed in 2020.”
To contact the reporter on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net
To contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Jon Herskovitz
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