*
BOJ's review of past policy 'meaningful' - Econ minister
Goto
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Hopes BOJ responds nimbly if economy faces risks -Goto
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Top govt council debates progress in eliminating deflation
risk
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Some policymakers wary of declaring end to deflation too
soon
(Recasts with Goto's quotes, BOJ policy implication)
By Leika Kihara
TOKYO, May 15 (Reuters) -
The new governor of the Bank of Japan received a lukewarm response from the government on Monday to his plan to conduct a review of past monetary easing steps, as it remains cautious of declaring victory in a decades-long battle to end deflation.
Governor Kazuo Ueda took up his post in April, and with
inflation exceeding the BOJ's 2% target, markets are rife with
speculation he will phase out his predecessor's massive stimulus
that sets a 0% cap on long-term interest rates.
Ueda announced a plan to review past monetary policy moves
last month , when the BOJ kept its interest rates at their ultra-low levels. The review was seen as laying the ground for Ueda to gradually reel in the monetary stimulus.
In a press conference on Monday, Economy Minister Shigeyuki
Goto said the government "recognises and believes it is
meaningful" for the BOJ to look back at the stimulus measures it
took to combat deflation in the past 25 years.
But Goto said he was also mindful of the BOJ's explanation
that the review would not prevent the bank from shifting policy
if it needed to respond to economic shocks.
"When various downside risks emerge, and the economy and
financial conditions change, the BOJ must respond nimbly," Goto
said, signaling the government's hope for the central bank to
focus on supporting the economy with ultra-loose policy.
Goto's remarks came after a meeting of the top economic
council on Monday, where policymakers and academics debated the
role the government and the BOJ should play to push wages higher
in a sustainable way and eliminate the risk of a return to
deflation.
But some policymakers are wary of declaring an end to
deflation risks on concern that slowing global demand could hit
Japan's economy and discourage firms from raising wages.
In a sign the BOJ will be in no rush to hike rates, the BOJ
last month tweaked its policy guidance to clarify that wage
growth must accompany price rises for the central bank to
consider phasing out stimulus.
(Reporting by Leika Kihara; Editing by Kim Coghill & Simon
Cameron-Moore)
