Japan government piles pressure on BOJ ahead of October 30 meeting
TOKYO (Reuters) - Japan's government piled fresh pressure on the central bank to expand monetary stimulus on Tuesday, as the economics minister said he wanted to attend a rate review meeting next week to reiterate a call for bolder action to bolster an economy wounded by both the global slowdown and a diplomatic row with China.
Facing growing heat, the Bank of Japan is leaning toward easing at the October 30 meeting, according to sources familiar with its thinking, with policymakers discussing additional steps that could come together with a further increase in its asset buying scheme.
Economics Minister Seiji Maehara said on Tuesday he hopes to take part in next week's BOJ policy meeting unless it conflicts with any essential duties as minister.
"I hope to continue calling on the BOJ to pursue powerful monetary easing to achieve at an early date its 1 percent inflation target," he told reporters after a cabinet meeting.
Finance Minister Koriki Jojima also said he expects the central bank to work closely with the government and take bold policy measures.
"There is increasing downward pressure on Japan's economy. It is urgent that we take measures to ensure an early escape from deflation and to ensure economic growth," he told a news conference.
But Jojima said there is no truth to a media report that the government is requesting the central bank to increase asset purchases by 20 trillion yen ($251 billion) to bolster economic growth.
The Sankei newspaper reported on Tuesday, without citing any sources, that the government wants the BOJ to top up its asset buying and loan program by that amount to bring the total size to 100 trillion yen.
The BOJ set a 1 percent inflation target and eased policy via an increase in its asset-buying program in February. It followed up with further stimulus in April and September as a strong yen and weakening global demand threatened to derail a fragile economic recovery.
But the central bank has been under pressure to expand monetary stimulus again at its October 30 rate review, when it is expected to cut its growth forecasts and push back the timing for hitting its 1 percent inflation target.
Exports suffered their sharpest decline since the aftermath of last year's earthquake in the year to September and business sentiment hit its lowest since 2010, offering the latest evidence that the world's third-biggest economy was struggling to sustain its momentum in the face of global headwinds.
The BOJ cut its assessment for eight out of nine regions in Japan in a quarterly report on Monday, admitting to the widening pain from weakening exports and factory output.
As a consequence, many central bankers are leaning toward easing policy, sources familiar with the bank's thinking say, although there is no consensus yet on what the best next step would be.
In a rare move for a cabinet minister, Maehara, a vocal advocate of more aggressive monetary easing, attended the BOJ's policy-setting meeting earlier this month to make a direct call for bolder action.
Two government representatives, one from the finance ministry and another from the Cabinet Office, which Maehara heads, can attend the BOJ's policy meetings. They cannot vote but may express views and propose a request in vote on policy.
($1 = 79.8200 Japanese yen)
(Reporting by Leika Kihara; Editing by Michael Watson/Simon Cameron-Moore)
- Insight: How U.S. spying cost Boeing multibillion-dollar jet contract
- Exclusive: Secret contract tied NSA and security industry pioneer |
- With Fed out of the way, what's next on Wall Street?
- Yemeni al Qaeda says attack on hospital was mistake
- Insight: For Chinese farmers, a rare welcome in Russia's Far East
A federal judge struck down Utah's ban on same-sex marriage as unconstitutional, handing a major victory to gay rights activists in a conservative state Slideshow