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Economy

Economist Ito drawing attention in runup to BOJ meet

TOKYO -- The Bank of Japan will hold its Annual International Conference on May 28 and 29. The conference is one of the largest international meets hosted by the BOJ, and will be attended by over 50 well-known scholars and central bank executives, including former U.S. Fed chair Ben Bernanke and current chair Janet Yellen, from Japan and abroad.

     But this year, an economist, who will come back to the conference for the first time in four years, has been the center of the BOJ's attention.

     "I think I was asked to speak at the conference as a reward for the adoption of my policy," Takatoshi Ito, professor of the University of Tokyo, said jokingly. The appointment of Ito as a speaker on the first day's session has been attracting attention within the BOJ.

     Ito has been suggesting the BOJ introduce inflation targeting to get the nation out of deflation for more than a decade. The BOJ adopted a 2% inflation target in January 2013, when Masaaki Shirakawa was the bank's governor. But until then, Ito's argument has not been accepted for many years.

     Among others, Ito sharply criticized the monetary policy stance in the era of former Gov. Shirakawa by saying: "Even if the BOJ boosted its balance sheet by asset purchases, it didn't have much effect as it was obvious that Gov. Shirakawa was skeptical about the effect of the policy from his press conference." The BOJ maintained a distance from Ito back then.

     It will be the first time for Ito to make presentations at the BOJ International Conference. He has only played a role of questioning other speakers and discussing in the previous conferences. This time, he will talk about the effect of the BOJ's current quantitative and qualitative monetary easing, comparing with its previous quantitative monetary easing policy.

     The Institute for Monetary and Economic Studies, which organizes the conference, has played a role of providing theoretical support in implementing monetary policy. Many of the institute's previous director-generals have been former BOJ officials who have taken traditional positions, including Kunio Okina.

     Ito has strong connections to current BOJ Gov. Haruhiko Kuroda. As deputy vice minister he supported Kuroda, who served as vice minister of finance for international affairs, for two years starting in 1999. Another person who is familiar with the situation at the time noted, "Kuroda and Ito would always go to lunch together and come back to the Finance Ministry after stopping at the Starbucks Coffee in Toranomon." The two have similar ideas about monetary policy.

     Ito will have to be faced with questions and discussions from the audience at the month-end international conference. How will Ito evaluate the BOJ's current monetary policy and future policy issues? Discussions of Ito's reports may give some clues as to the future of the BOJ headed by Kuroda.

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