Japan next PM Abe says eyes big extra budget to beat deflation

TOKYO Mon Dec 17, 2012 12:35am EST

TOKYO Dec 17 (Reuters) - Japan's next Prime Minister Shinzo Abe said on Monday an extra budget his government plans to compile will be large in size given the country's output gap, which is behind deflation.

He also told a news conference the government will reinstate the Council on Economic and Fiscal Policy, a key panel that was in place when his Liberal Democratic Party was previously in power, and will ask the governor of the Bank of Japan to attend its meetings.

He said he will form his cabinet on Dec. 26, and once it is created he will instruct ministers to work with the BOJ in issuing a joint statement setting a 2 percent inflation target.

He also said he wants the central bank to take into account the fact that the public supported his views on monetary policy when it hold a policy meeting on Dec 19-20.

The conservative LDP surged back to power in an election for parliament's lower house on Sunday, just three years after a devastating defeat, giving Abe a chance to push his hawkish security agenda and radical economic recipe.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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