Location:Home > Policy Consulting > Economic News > Details

Abe leans on BoJ in post election meeting By Michiyo Nakamoto in Tokyo (FT)

发表于 cjyyzb1
Shinzo Abe, Japan’s incoming prime minister, has asked the Bank of Japan governor to set an inflation target of 2 per cent, posing a dilemma for the hawkish central bank as it heads into its monetary policy meeting, which starts on Wednesday.

Mr Abe, who led his Liberal Democratic party to an overwhelming victory in national elections on Sunday by calling for “unlimited” monetary easing and a reflationary economic policy, made the request directly to Masaaki Shirakawa, BoJ governor, who has set an inflation goal of 1 per cent and has been reluctant to ease more aggressively.

The renewed pressure by the incoming government puts Mr Shirakawa in a tight spot as Mr Abe has threatened to challenge the independence of the BoJ unless it co-operates.

“I told him that I wanted an inflation target of 2 per cent . . . and to forge a policy accord with the BoJ to achieve that objective,” Mr Abe told reporters. The exchange came during a meeting with Mr Shirakawa on Tuesday, following the Liberal Democrats’ landslide victory. As leader of the LDP, Mr Abe will become Japan’s new prime minister when a special Diet session is convened on December 26.

Mr Abe’s view that more aggressive easing from the central bank is critical to reflating the Japanese economy contrasts with the BoJ’s stance that Japan already enjoys “extremely accommodative financial conditions”, as Mr Shirakawa said in a speech in November. The BoJ has said that its price stability goal in the medium to long term was in “a positive range of 2 per cent or lower” but that it woud aim for a 1 per cent inflation rate for the time being.

Attention is focused on whether the BoJ will adjust its inflation expectations this week to meet the new government’s goal or wait until its January policy meeting.

Before the election result analysts had predicted that the BoJ would use this week’s meeting to increase its asset purchase programme. But it could also delay and expand quantitative easing aggressively in January, to achieve modest inflation before a decision must be made on the introduction of a controversial consumption tax hike, Izumi Devalier, Japan economist at HSBC in Tokyo, said in a report.