BOJ’s Shirai warns against BOJ bond underwriting

TOKYO, April 1 (Reuters) – The Bank of Japan’s new board
member Sayuri Shirai said on Friday that if the BOJ were to
underwrite government bonds it would hurt confidence in the yen
and eventually raise the government’s borrowing costs.

“The BOJ’s underwriting of government bonds might cause a
loss of confidence in the currency and this might affect
long-term rates and significantly raise government borrowing
costs,” Shirai, a former IMF economist, said at her first news
conference as a board member.

Shirai, who was previously a professor of economics and
policy at Tokyo’s Keio University, started work on Friday as the
central bank board’s only female member, taking a seat vacated
by Miyako Suda, whose term expired on Thursday.

She is expected to vote at the BOJ’s next policy-setting
meeting on April 6-7.

Little is known about Shirai’s views on monetary policy but
analysts say she is unlikely to cause a stir at least in the
near term. They expect her expertise on European debt problems
as well as China’s yuan and currencies to help deepen the
central bank’s debates on issues such as global

The BOJ faces mounting calls to print money to finance the
costs of disaster relief and reconstruction after last month’s
devastating earthquake, and politics, not markets, could be the
next trigger for the central to ease monetary policy further.

(Reporting by Leika Kihara and Rie Ishiguro; Editing by Edmund

BOJ’s Shirai warns against BOJ bond underwriting