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TOKYO, Sept. 22 -- The Bank of Japan (BOJ), the country's central bank, should take moves to soften potential negative impacts of the government's planned next round of sales tax hike, a senior official of the Organization for Economic Cooperation and Development (OECD) urged Monday.
Rintaro Tamaki, deputy secretary general of the OECD, said at a press conference here that the further 2-percentage-point tax hike planned in October 2015 would weigh on Japan's economy, which is the world's third largest, again, as the country's economic growth almost stalled after a sales tax hike in April this year.
Economic downturn triggered by the tax change should be avoided by "short-term measures, in particular, monetary policy," Tamaki was quoted as saying.
"The BOJ should make a commitment as soon as possible to maintain its monetary easing policy" after 2015, with an eye on the future sales tax hike, Tamaki added.
But the Japanese former vice finance minister said that the OECD does not recommend massive fiscal stimulus by Japan as the tax hike is to improve Japan's bad finance health, the worst among major developed economies.
Japan's economy shrank an annualized real 7.1 percent in second quarter of the year due to the sales tax hike in April and the trend triggered doubts that whether the government should continue the tax change in 2015.
Japanese Prime Minister Shinzo Abe said that he will make the final decision on the issue by the end of this year after assessing economic indicators that are to be released through December.
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