October 29, 2012 / 2:21 AM / in 5 years

Japan finance minister urges BOJ to seek bold easing versus deflation

TOKYO (Reuters) - Finance Minister Koriki Jojima said he wants the Bank of Japan to take bold policy steps while closely working with the government to beat deflation, piling pressure on the central bank to act on the eve of its rate review.

Jojima made the remark as a slew of worsening economic data has reinforced market views that the central bank will boost its asset purchases, probably by 10 trillion yen ($125.7 billion), on Tuesday when it is expected to cut its economic projections.

Adding to growing evidence the economy may slide into a mild recession, retail sales rose a weaker-than-expected 0.4 percent in the year to September.

“The government and the BOJ share the view that it is extremely important to beat deflation,” Jojima told reporters after a cabinet meeting on Monday.

“I expect the BOJ to continue to promote bold monetary easing while working closely with the government,” Jojima said, adding that he did not know what decision would be reached at the BOJ’s rate review on Tuesday.

He reiterated expectations for the central bank to judge monetary policy appropriately while taking into account economic and market movements.

The BOJ is expected to ease policy on Tuesday by expanding its asset purchases and may make a stronger commitment to continue pumping cash into the economy until 1 percent inflation is achieved, sources say, as slumping exports heighten pressure for bolder action to support an economy on the verge of recession.

The government for its part approved last week a $5.3 billion package of measures to prop up a flagging economy.

“In response to strengthening of downward pressures on the economy, it is urgently needed to accelerate efforts to beat deflation quickly and revive the economy,” Jojima said.

($1 = 79.5600 Japanese yen)

Additional reporting by Leika Kihara; Editing by Michael Watson and Jacqueline Wong

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