U.S. Treasury's Lew urges Japan to use 'three arrows' of policy-official

By Reuters

Nov 15, 2014 10:42 PM EST

U.S. Treasury Secretary Jack Lew emphasized to Japan's finance minister the need for Japan to use all three arrows of its economic recovery policy to escape deflation, a U.S. Treasury official said on Saturday.

Lew met with Taro Aso on the sidelines of a G20 summit in Brisbane, Australia.

"Secretary Lew emphasized the need for Japan to use all three arrows of Japan's economic policy to bring about recovery and sustain a healthy rate of domestic growth," a U.S. Treasury official said.

"Secretary Lew noted that, to ensure the recovery and escape from deflation, Japan needs to more than fully offset the short-term, contractionary impact of the expiration of past fiscal stimulus measures and the next consumption tax increase, should Prime Minister Abe decide to proceed with it on the current schedule."

Prime Minister Shinzo Abe's goal of reflating Japan's long-moribund economy hinges on a three-pronged plan for massive monetary easing, higher spending and reform.

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