* Japan should worry only after yen falls beyond 110 vs
* BOJ likely to take easing steps next week - Hamada
* Adds no grounds for Japan to worry about inflation now
By Leika Kihara
TOKYO, Jan 18 A weakening of Japan's currency to
95 or 100 yen to the dollar is nothing to worry about, an
economic adviser to Prime Minister Shinzo Abe said on Friday,
suggesting that recent yen declines are justified and beneficial
for the export-reliant economy.
"(A dollar/yen level of) 100 is a very good border line,"
Koichi Hamada, Abe's special economic adviser, told a news
conference. "If you go to 110 or more in yen weakness, then we
should be worried. But (a dollar/yen level of) 100 or 95 is
nothing to worry about," he said.
The comments nudged up the dollar on EBS above 90.14 yen
, its highest level in more than two-and-a-half years.
Hamada, a Yale University professor, also said the Bank of
Japan is expected to take some form of monetary easing steps at
its rate review next week.
"Only after monetary policy is used at its full extent would
fiscal policy be effective in stimulating the economy," he said.
Hamada said there was always a threat that excessive money
printing could fuel unwelcome inflation, and that it was hard to
pre-determine what volume of bonds central banks should buy to
stimulate an economy.
But Hamada, who Abe admires as an expert on monetary policy,
said such a concern was groundless in a country such as Japan
that has been mired in deflation for most of the past two
"Economics is like medicine. We don't know how much medicine
is needed to cure high fever, so you have to try and observe,"
said Hamada, who has long criticised the BOJ for being too
hesitant to ease monetary policy.
"But you have to try as much as you can to beat deflation,"
he said. "There is no ground for substantial inflation (in
Japan) right now."
The BOJ is expected to double its inflation target to 2
percent and ease monetary policy at a meeting ending on Tuesday,
sources have told Reuters, under pressure from Abe to take
bolder steps to beat deflation.