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Ex-BOJ’s Suda: Japanese central bank putting independence at risk with quasi-fiscal steps

The Bank of Japan (BOJ) is at risk of losing its independence, as it heads towards the realm of fiscal policy amid an absence of conventional monetary policy tools, a former central bank board member, Miyako Suda, told Reuters on Monday.

Key quotes

"One thing that worries me is an increase in BOJ policies that need government consent, such as buying ETFs. Monetary policy is morphing into something that cannot be conducted solely through normal BOJ operations."

"The BOJ's tools are getting more involved in income distribution, which is the realm of fiscal policy.”

"This could put the central bank's independence on the line."

"Responding to the crisis is important. But the BOJ may find it hard to decide on its own when to end crisis-mode steps if they're tied too closely to those of the government.”

Market reaction

USD/JPY trades modestly flat around 108.80, divided between upbeat market mood and broad US dollar weakness.

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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