February 29, 2012 / 2:00 AM / 8 years ago

BOJ's Kamezaki: Europe debt woes hold lessons for Japan

FUKUOKA, Japan, Feb 29 (Reuters) - Japan needs to learn from Europe and act steadily to restore its fiscal health to avoid a sudden spike in bond yields, a central bank policy maker said on Wednesday.

“The lesson from Europe’s debt problems is that once trust in a country’s finances declines, government bonds may not be considered a safe asset,” Bank of Japan board member Hidetoshi Kamezaki said in a speech to business leaders in Fukuoka, in southern Japan.

“It would be inappropriate to assume that just because Japanese government bonds have been stably absorbed in the market, there is no need to worry about the future.”

The BOJ boosted its asset buying programme earlier this month and set an inflation goal of 1 percent in the face of political pressure, signalling a more aggressive monetary policy to pull the ailing economy out of deflation.

A former executive at Japanese trading firm Mitsubishi Corp , Kamezaki has mostly voted with the board but has repeatedly stressed the need to act pre-emptively against risks to Japan’s economy such as sharp yen rises and slowing overseas growth. His term expires in April.

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