Japanese insurance lobby urges central bank to begin stimulus exit plan

Monetary body should not hesitate to discuss easy money policy rollback, says lobby chairman

Japanese insurance lobby urges central bank to begin stimulus exit plan

Insurance News

By Gabriel Olano

The chief of a Japanese life insurance lobby has called on the Bank of Japan (BOJ) to begin debating an exit strategy for the country’s ultra-low interest policy.

“The BOJ shouldn’t be afraid of revising [its exit strategy] in the future and openly debate the subject now, paying heed to market voices,” Akio Negishi, chairman of the Life Insurance Association of Japan, told reporters at a news conference on Friday.

Signs of improvement have been sighted in Japan’s economy, prompting the BOJ to find a way to inform markets that it will be rolling back its stimulus without causing investors to panic.

BOJ officials are hoping to convince markets they have a credible exit strategy in the works, but they must be careful not to give out details too soon to avoid confusion, reports Reuters. The BOJ is also reluctant at this time to release figures of an exit’s possible effect on the BOJ balance sheet, as the actual numbers could still turn out quite different from the predictions.

Negishi, on the other hand, said that the BOJ can avoid market confusion if it engages in good dialogue.

“We hope the BOJ releases [details of an exit strategy] with clear, meticulous explanation,” which will help deter market confusion, he said.

Experts foresee that the BOJ will be slower in rolling back its stimulus than its counterparts in Europe and the US, as inflation remains below target and stagnant at around zero percent.

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