BOJ Deputy Pledges ‘Decisive’ Policy Move

Bank of Japan Deputy Governor Hirohide Yamaguchi pledged “decisive” policy action when needed as Europe’s sovereign-debt crisis poses greater risks to the global economy.

The BOJ will “take appropriate policy actions in a flexible and decisive manner” if necessary, Yamaguchi said today in a speech in Nagano, central Japan. “The bank is aware that uncertainties at home and abroad are significant.”

The International Monetary Fund yesterday recommended that the BOJ support the economy by increasing its asset purchases, its main policy tool. The yen rose to a four-month high of 78.47 against the dollar last week on concern Europe’s sovereign-debt crisis will spread and Yamaguchi’s comments signal the BOJ can act even after Governor Masaaki Shirakawa expressed increased optimism about the nation’s recovery from the March 11 earthquake, according to analyst Mari Iwashita.

“This is a pretty dramatic change given that Shirakawa provided a relatively sanguine view on the economy just a week ago,” said Iwashita, chief market economist at SMBC Nikko Securities Inc. in Tokyo. “I don’t think the BOJ is considering taking action now but the comments indicate the BOJ will take action when the European debt crisis begins to take a significant toll on Japan’s stocks and the yen.”

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