Nouriel Roubini's Global EconoMonitor

Reuters – Japan to Ease Monetary Policy Further: Roubini

Reuters — Nouriel Roubini, best known for predicting the U.S. housing meltdown, said he expects Japan‘s central bank to ease monetary policy further by buying more government debt in the wake of the earthquake.

Roubini, one of Wall Street’s most closely followed economists, said the Bank of Japan (BoJ) would have to set aside more money to buy bonds from the government to help pay for Japan’s reconstruction works.

The BoJ’s future purchases of government bonds, also known as quantitative easing (QE), are likely to be larger than the amount that was unveiled this week, Roubini said on the sidelines of a conference in Beijing.

“They have already done QE I, QE II, now there will be a third round, and the third round might be larger than the smaller amount of quantitative easing that they have done so far,” he told Reuters.

The BoJ doubled the cash it sets aside for buying assets such as government bonds on Monday to 10 trillion yen ($124.1 billion) in an emergency move to shore up confidence in crisis-stricken Japan.

That was the second round of quantitative easing unveiled by the BoJ since October, when it first set aside a pool of 5 trillion yen to buy assets to partly rein in the yen.

“They need their massive fiscal stimulus for rebuilding, but they are starting with a very large public deficit and with a very large stock of debt,” Roubini said.

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