(Adds background and details)
BERLIN Jan 17 German Finance Minister Wolfgang
Schaeuble said on Thursday he was very concerned about an
expected further easing of monetary policy in Japan, which the
new government is encouraging.
"I'm pretty worried about the new policies of Japan's
newly-elected government," Schaeuble said in a speech to the
German Bundestag (lower house of parliament). "When you think of
the surplus of liquidity on global financial markets, it is
fuelled further by a wrong understanding of central bank
The Bank of Japan eased policy five times last year but
Prime Minister Shinzo Abe, who took office last month, has put
pressure on the central bank for even bolder monetary easing at
a policy meeting next week.
The independent BOJ, under pressure from Abe, will double
its inflation target to 2 percent and consider easing policy
again, most likely through an increase in its 101 trillion yen
($1.1 trillion) asset-buying and lending programme, sources have
A Russian central banker has warned of the risk of other
states following Japan with a round of destabilising currency
devaluations - Alexei Ulyukayev, first deputy chairman of the
central bank, used the term "currency wars".
The euro rose to its highest in 20 months against the yen
this week, which may have been what prompted Jean-Claude
Juncker, head of the Eurogroup of euro zone finance ministers,
to tell business leaders the euro was "dangerously high".
German Economy Minister Philipp Roesler said on Wednesday,
presenting the 2013 economic outlook, that he did not entirely
share Juncker's view but did want the European Central Bank to
return "as quickly as possible" to its primary mandate of
ensuring price stability in the euro zone.
Roesler said Germany does not need to worry about rising
interest rates in the current year. Germany's annual inflation
rate rose for the first time in four months in December, just
breaching the ECB's target threshold of 2 percent.
The German government and the Bundesbank have both hinted
they would tolerate higher prices as long as euro-wide inflation
remains under control. That could help ailing euro zone
countries boost their competitiveness.
Schaeuble told the Bundestag that the common currency zone
was on track to overcome its sovereign debt crisis, though he
cautioned that "we are not over the mountain yet".
(Reporting by Stephen Brown and Madeline Chambers; Editing by