Japan PM, BOJ chief meet as monetary policy decision looms

Japanese prime minister Yoshihiko Noda met Bank of Japan Governor Masaaki Shirakawa in Tokyo on Friday, the central bank said, ahead of a monetary policy meeting next week and their second meeting in two months, as Noda has said he is keen to maintain regular contact with the central bank chief.

But Shirakawa did not say whether the two discussed monetary policy, telling reporters after the meeting only that they had a “frank exchange of views”, according to Jiji news agency.

Under pressure to take bolder steps to beat deflation, the central bank surprised markets on February 14 by boosting asset purchases and setting a 1 percent inflation target. Noda last met Shirakawa the day after that decision.

Many analysts expect the BOJ to ease policy again this month but the prevailing view is that it will stand pat at its meeting on April 9-10 and wait to act at another meeting on April 27, when it issues new long-term economic projections that will likely show it is a long way from achieving 1 percent inflation.

Despite February’s surprise action, the central bank remains under pressure to offer further stimulus to the fragile economy.

Lawmakers demanding more aggressive steps on Thursday turned down a government nominee to fill a vacancy at the BOJ’s policy board, arguing that the candidate – a well respected central bank watcher – was not eager enough in pursuing aggressive monetary easing.

Noda himself has shown understanding of the need to respect the BOJ’s independence and gets along well with Shirakawa.

But he cannot turn a blind eye to demands coming from even within his own party for more stimulus to keep the economy afloat as he tries to muscle through much-needed tax increases to fix Japan’s tattered finances. He has repeatedly said in parliament that he plans to meet frequently with Shirakawa.

Some lawmakers have gone so far as to call for a revision to the BOJ law that guarantees the central bank’s independence from the government, while Japan’s biggest opposition party wants the central bank to raise its inflation target to 2 percent.

http://www.reuters.com/article/2012/04/06/us-japan-economy-noda-idUSBRE83501H20120406

 

Category: Japan