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BOJ must keep easy policy to support economy - Shimizu
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Financial stress warrants close monitoring - Shimizu
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Overseas risks key to BOJ's growth, inflation forecasts
(Adds inflation comment, wage outlook)
By Leika Kihara
WASHINGTON, April 14 (Reuters) - Bank of Japan Assistant
Governor Tokiko Shimizu said on Friday there had been "extremely
high" uncertainty regarding Japan's economy, as slowing global
growth and recent financial market stress cloud its outlook.
"The BOJ deems it necessary to conduct monetary easing and
support the economy, and provide a favourable environment for
firms to raise wages," Shimizu told a seminar hosted in
Washington by the Peterson Institute for International
Economics.
Rapid interest rate hikes by U.S. and European central banks
could eventually depress global growth, which was among risks
discussed at this week's International Monetary Fund (IMF)
meetings, Shimizu said.
"More recently, financial market stress is drawing
attention," she said. "Taking these risks into account, it's
necessary to pay due attention to developments in the financial
sector" and the impact on Japan's economy and prices.
The remarks came after the IMF on Tuesday trimmed its 2023
global growth outlook and warned that a severe flare-up of
financial system turmoil could slash output to near recessionary
levels.
Reflecting rising raw material costs and a tightening job
market, more Japanese firms are raising prices and wages in a
sign of change in the public's long-held deflationary mindset,
Shimizu said.
Many big firms have accepted union demands for pay increases
with some smaller companies following suit, she said.
Despite such positive signs, broader wage hikes are needed
for Japan to hit the BOJ's 2% inflation target in a stable,
sustainable manner, Shimizu said.
Shimizu is among BOJ officials accompanying new central bank
governor Kazuo Ueda on a visit to Washington for this week's IMF
and G20 finance leaders' meetings.
Japan's economy has made a delayed recovery from the scars
of the COVID-19 crisis, with an end to pandemic-induced curbs
propping up consumption.
But global recession fears cloud the outlook for the
export-reliant economy, a risk that may keep the BOJ from
phasing out its massive stimulus.
Markets are focusing on the BOJ's first policy meeting to be
chaired by Ueda, on April 27-28, when the board will produce
fresh quarterly growth and inflation forecasts extending through
fiscal 2025.
(Reporting by Leika Kihara; Editing by Mark Potter and Mike
Harrison)
