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TOKYO: Japan’s central bank chief warned Friday to
pay attention to the risks from soaring energy prices, saying that
policymakers underestimated the impact of the oil shocks in the
1970s.
But Bank of Japan Governor
Masaaki Shirakawa stayed tight-lipped on the course for interest
rates. He reiterated his view that the world’s second biggest
economy was slowing in the short-term but would not face recession.
Central bankers in the United
States and Europe have increasingly signaled that their chief
concern was inflation—which would incline them to raise interest
rates—rather than slowdown fears that have led to rate cuts.
“The Bank of Japan is no
exception. We need to have an appropriate monetary policy amid the
combined risks of recession and inflation,” Shirakawa said in a
speech.
But he cautioned to look at how
Japan reacted in the 1970s, when oil prices soared on trouble in the
Middle East.
“Looking back to what the
monetary policy authorities had discussed in the 70s and 80s, I
found that the dominant view at the beginning was that the country
would not have to worry about inflation. But the result was that
there was serious inflation,” Shirakawa said.
“People tend to think that this
time is different. We shouldn’t think that way,” he told a think
tank affiliated with Jiji Press.
The Bank of Japan on Tuesday kept
its benchmark-borrowing rate at 0.50 percent, the lowest among major
economies. Shirakawa said that the chances that Japan would hike or
cut interest rates remained “50-50.”
Crude oil prices have jumped
five-fold since 2003, although they eased this week.
-AFP
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