TOKYO, Jan 28: The Bank of Japan (BoJ) should carefully monitor the signals sent out by asset prices, BoJ board member Atsushi Mizuno was quoted as saying by a business daily.

Asset prices should not be made a direct target of monetary policy. On the other hand, the signals that asset prices send out need to be watched sufficiently closely, he was quoted as saying by the Nihon Keizai Shimbun in its Saturday morning edition.

Mizuno is viewed as one of the more hawkish members of the BoJ’s nine-member policy board.

The current situation can’t be said to be a re-emergence of a bubble but bubbles always take new appearances, he said in reply to a query about asset prices, including share prices.

Tokyo’s benchmark Nikkei share average rose 3.58 per cent on Friday to its highest close in more than five years.

As deflationary pressures ease, and after recent hawkish comments by central bankers, financial market participants expect the BoJ to end its ultra-easy, “quantitative easing” policy between April and June.

Under the policy, the BoJ floods the banking system with excess funds, which has pinned short-term rates near zero.

On this front, Mizuno said the impact of Japanese retail investors’ growing participation in equity markets needed to be watched closely, since it meant that moves in share prices would have more direct impact on households.—Reuters