BOJ warns Japan faces new risks amid shrinking population

- Associated Press, TOKYO

Jan 18, 2019-

Japan faces unforeseen risks in guiding economic policy as its population of about 126 million ages and declines, the governor of its central bank said on Thursday.

Bank of Japan Gov. Haruhiko Kuroda told fellow financial leaders Thursday that policies must be devised to prevent the shrinking population from hindering economic growth.

Since taking his post in April 2013, Kuroda has flooded Japan’s economy with cash through central bank asset purchases to help fight deflation and keep the economy growing. The BOJ also imposed a negative interest rate policy to keep lending costs ultralow in the longer term.

The conventional strategy of controlling short-term interest rates to keep inflation in check while stimulating business activity is well understood, Kuroda said. But he warned that the unconventional methods the Bank of Japan has adopted can have unexpected consequences.

Kuroda has repeatedly emphasized the limits to what the central bank can do to promote sustained growth in an age of rising national debt and feeble consumer demand.

He has urged the government to push ahead with labor and other reforms to help achieve faster growth and attain the government’s inflation target of about 2 percent.

Published: 18-01-2019 10:44

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