BOJ Absent from Global Central Bank Support for Fed’s Powell

Tokyo, Jan. 17 (Jiji Press)–The Bank of Japan is adopting a wait-and-see approach over the U.S. Department of Justice’s investigation of Federal Reserve Chair Jerome Powell, while other central banks around the globe have expressed their support for him. BOJ Governor Kazuo Ueda did not join a group of central bank governors who issued a joint statement this week in support of central bank independence and in solidarity with Powell. This may reflect the BOJ’s consideration of the Japanese government’s emphasis on maintaining relations with the administration of U.S. President Donald Trump. The investigation appears to indicate an escalation of Trump’s pressure on Powell to cut interest rates sharply. In Tuesday’s joint statement, the governors of major central banks, including those in Europe, affirmed their “full solidarity” with the Fed and Powell. “The independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve,” the joint statement said. More than 10 central banks have participated in the action for their U.S. counterpart, including the European Central Bank and those in Britain, Switzerland, Australia, Canada, South Korea, Brazil and Indonesia. In contrast, a Bank of Japan official said, “We will refrain from commenting on actions by central banks in other countries.” The official still acknowledged the importance of central bank independence for achieving price stability. The BOJ’s absence from the joint statement is “very disappointing,” said Takahide Kiuchi, a former BOJ policymaker and executive economist at Nomura Research Institute Ltd. “The BOJ is not completely independent from the government,” he argued. “The BOJ is apparently worried about causing a deterioration in Japan-U.S. relations (by joining the joint statement),” Kiuchi said. END [Copyright The Jiji Press, Ltd.]