UTSUNOMIYA, Tochigi Pref. -- The Bank of Japan should not completely rule out the possibility of a return to its "zero-interest-rate" policy, a member of the central bank's Policy Board said here Thursday.
"Monetary policy measures in addition (to the lowering of the official discount rate earlier this month) are necessary," Teizo Taya said during a news conference at a local hotel.
"I don't think it's productive to completely rule out a return to the 'zero-interest-rate' policy and reserve it for special situations . . . but personally, I do not think this (is necessary) at this point in time."
Taya voted in favor of scrapping the central bank's interest-rate policy in August.
Political pressure has intensified on the BOJ to further ease its monetary policy, following last week's meeting of finance ministers and central bank chiefs of the Group of Seven nations. The meeting called on Japan to continue to secure monetary liquidity.
Taya also said he will take into account the progress of Financial Services Agency talks, which are aimed at encouraging banks to directly dispose of their bad loans, when he votes on monetary policy at the next two policy meetings.
The next meeting is scheduled for Wednesday.
"Final disposal of nonperforming loans brings with it the possibility of increased bankruptcies and increased deflationary pressure," Taya said. "If in macroeconomic terms, deflationary pressures rise, it is part of the BOJ's job to react."
"It is too late to act after deflationary pressure rises. We need to think of (the next policy step) at the point at which we can predict increased deflation with reasonable certainty.
"No matter how few our choices, acting in a timely manner under the given circumstances will connect to trust (in the central bank)," he said.