BOJ Wakatabe warns against pricking bubbles with monetary tightening

TOKYO (Reuters) – Bank of Japan Deputy Governor Masazumi Wakatabe said on Thursday that trying to prick asset-inflated bubbles with tighter monetary policy could tip economies into a serious recession.

Instead of trying to pre-empt asset bubbles, central banks should focus on taking quick and sufficient steps to reflate growth in the wake of a financial crisis, he said.

“As downward pressure is exerted on the economy in the wake of a crisis, it would be necessary to respond with vigorous expansionary macroeconomic policies,” Wakatabe said in a speech at a seminar.

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