March 5, 2013 / 1:55 AM / in 5 years

BOJ nominee Iwata: monetary easing must accompany fiscal spending

TOKYO, March 5 (Reuters) - Monetary easing must accompany fiscal spending to help Japan escape deflation because increased spending could cause bond yields and the yen to rise, Kikuo Iwata, the government’s nominee to become central bank deputy governor, said on Tuesday.

A widespread belief that the BOJ’s monetary policy regime has changed would cause money to flow from savings accounts into equities and other investments, which would stimulate consumption and corporate investment, Iwata said at a confirmation hearing in the lower house of parliament.

Prime Minister Shinzo Abe last week nominated Iwata, a professor at Tokyo’s Gakushuin University, to be the new deputy governor of Japan’s central bank in a push for more aggressive monetary easing to meet a 2 percent inflation target and end nearly two decades of deflation.

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