By Tetsushi Kajimoto and Yoshifumi Takemoto
TOKYO, April 20 (Reuters) - The Bank of Japan (BOJ)
should alter its massive monetary stimulus even though it may be
painful for an economy accustomed to decades of ultra-low
interest rates, the country's former top currency diplomat
Rintaro Tamaki said.
New BOJ Governor Kazuo Ueda currently has the "momentum"
needed to make those changes though he needs to act within a
year. Failure to act in that timeframe could mean the central
bank risks dragging its feet on changing monetary stimulus,
Tamaki said.
"I'm not saying Governor Ueda should immediately move at his
first policy review next week," Tamaki, now the president of
Japan Center for International Finance (JCIF), a non-profit
think tank, told Reuters on Wednesday.
"I hope he would demonstrate a stance towards changing the
status quo. If he sits tight throughout a year, he would lose
the momentum," he said.
"We should be aware of the risk of the BOJ shelving a step
towards monetary normalisation," Tamaki added.
As a result, Japan would be left with distortions in bond,
stock and real estate markets.
"To change YCC, you need some element of a little surprise,"
Tamaki added, without elaborating further.
Speculation is rife in markets that the BOJ may alter or
ditch its yield curve control (YCC) after Ueda assumed the helm
of the central bank.
(Reporting by Tetsushi Kajimoto; Editing by Sam Holmes)
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