IMF's Lagarde welcomes Japan’s easing programme

The head of the International Monetary Fund yesterday welcomed the Bank of Japan's new aggressive easing programme describing it as a step that would go towards supporting global growth.

''Monetary policies - including unconventional measures - have helped prop up the advanced economies, and, in turn, global growth. The reforms just announced by the Bank of Japan are another welcome step in this direction,'' said Christine Lagarde, the IMF's managing director, in a speech to a conference on the Asia economy in Hainan, China.

Last week, new BoJ governor Haruhiko Kuroda announced, an expansion of purchases of government bonds.

The plan would see the central bank buy Japan Government Bonds so that their amount outstanding would increase at an annual pace of about ¥50 trillion ($530 billion). The steps are designed to boost inflation to a 2 per cent rate.

Lagarde cautioned that monetary policy could not ''shoulder the lion's share'' of the effort for stimulating growth.

''There could also be unintended consequences - including from exit - that policy makers need to plan and watch for,'' Lagarde said.

She added, that Japan too needed to find a lasting way to lower its budget deficit.

The coming week would see the IMF release an update on the global economy.

According to Lagarde, the report would show, ''a substantial portion of the global economy looks better today than it did last year.''

''Growth continues to strengthen and broaden among the emerging and developing economies. And we are beginning to see momentum pick up in the U.S.,'' Lagarde said.

Praising Asia's economic performance, she noted that two-thirds of the global growth since the recession started in 2008 had occurred in Asian countries.

She added, though that there was a "patchy recovery" throughout the world, and that the overall improved economic fortunes did not amount to "enough of a real recovery." 

She added worries about low growth were centered in the 17-nation euro currency bloc in Europe, and that lack of agreement on financial policies in Washington could thwart growth in the American economy, the world's largest.

According to Lagarde, the Asian economy was expected to grow by 6 per cent this year, well above the US and European economies.

However, she added,  for future economic success, Asian countries needed to increase their spending on the health and training of future workers, increase the employment of women and protect the continent's environment.