Japan has exhausted all options to stimulate growth and needs structural reforms, a senior official at the Organisation for Economic Co-operation and Development said Friday.
The comments from Randall Jones, the head of Japan and Korea at OECD, come after the Bank of Japan's move on January 29 to adopt a negative interest rate policy for the first time ever in order to stimulate the economy as volatile markets threatened the central bank's efforts to overcome deflation.
The move, which follows in the footsteps of some European central banks, has triggered a debate on the likely impact on deposit rates as well the effect on pension returns amid a plunge in bond yields. Doubts also remain in general on the efficacy of charging banks for placing cash with the central bank.
The OECD is forecasting Japan's real GDP growth at 0.8 percent this year, down 0.2 percentage point from its forecast in November but double that for the 0.4 percent growth the country is estimated to have achieved in 2015.
Since taking office in 2012, Japan prime minster Shinzo Abe has advocated policies based on the "three arrows" of fiscal stimulus, monetary easing and structural reforms—also known as Abenomics.