BOJ Governor Ueda: Unconventional Tools May Be Needed Again If Severe Shock Hits

Deep News11-07 05:10

Bank of Japan Governor Kazuo Ueda was already one of the pioneers of quantitative easing in the late 1990s. He has said that while unconventional measures are less effective than traditional rate cuts, the BOJ may turn to those tools again if a major shock hits in the future.

Speaking in Washington on Friday after a speech at the International Monetary Fund and responding to questions, Ueda said: "Looking back at the impact that unconventional monetary policy tools had on the economy and inflation, I would say they did produce some positive effects." He said, however, that when interest rates are in positive territory, "as many people have said, they are not a perfect substitute for rate cuts."

He said: "Depending on the severity of the shock, we may have to use these tools again." Ueda said: "But if we need to use these tools again, we should consider how to minimize their negative effects — the negative side effects — which may include the impact on market functioning."

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