* BOJ buying foreign bonds could be option - Abe
* Adds BOJ can also seek ways to boost stock market
* PM Noda says having BOJ finance public debt wrong
By Leika Kihara
TOKYO, Nov 30 Japan's opposition leader Shinzo
Abe said on Friday he would leave it to the Bank of Japan to
decide on how to achieve its policy objectives, softening his
earlier demands specifying what steps it should take to beat
But he repeated his calls for the central bank to set a 2
percent inflation target, double its current goal, and find
unorthodox ways to stimulate the economy, suggesting that buying
foreign bonds could be among future options.
"If I become prime minister, I won't comment on specific
monetary policy measures, as they should be decided by the BOJ,"
Abe said in a joint party leaders' debate.
"One way could be (for the BOJ) to buy foreign bonds or try
to directly affect the stock market (through policy measures)
such as the U.S. Federal Reserve is doing," he said. Abe did not
say which among the Fed's measures he was referring to.
With interest rates virtually at zero, the BOJ has had in
place since 2010 an asset-buying programme as its key monetary
easing tool, under which it buys Japanese government bonds and
private debt, but not foreign bonds.
Some lawmakers want the BOJ to buy foreign bonds to keep yen
rises in check, but the central bank argues that it cannot do so
because that would be tantamount to currency intervention, which
falls under the jurisdiction of the finance ministry.
Abe is seen as the front runner to become prime minister in
an election for parliament's lower house on Dec. 16, which polls
suggest his Liberal Democratic Party (LDP) will win.
He has called for more aggressive easing to revive the
economy including through extreme steps such as seeking negative
interest rates, or setting a 2 percent inflation target and
pursue "unlimited" policy loosening to achieve it.
But Abe has recently toned down his demands after they were
criticised by BOJ policymakers and lawmakers of other parties as
Prime Minister Yoshihiko Noda, head of the ruling Democratic
Party, told the same debate that he sees 1 percent inflation as
an appropriate, realistic target given Japan has rarely seen
consumer inflation rise above that level in the past decade.
Noda also criticised a proposal by Abe that the central bank
should buy from the market government bonds issued to finance
spending for public works, to help stimulate an economy widely
seen as already in recession.
"Having the BOJ finance public debt is inappropriate. I
wouldn't adopt such a policy," Noda said.
The BOJ set a 1 percent inflation target in February and
loosened monetary policy four times so far this year, including
in September and October, to ease the pain on the economy from
weakening global demand.