TOKYO, Jan 6 — Japanese Finance Minister Taro Aso stressed today the need for bigger monetary and fiscal stimulus to revive the economy, but said the government will not insist on issuing a written policy accord with the central bank on a new inflation target.
New Prime Minister Shinzo Abe has called on the Bank of Japan to share a 2 per cent inflation target with the government, double the bank’s current price goal, to show its determination to beat deflation. Under pressure, the BOJ will debate setting a higher inflation target at its next rate review on January 21-22.
Aso said cabinet ministers will be able to discuss monetary policy regularly with BOJ Governor Masaaki Shirakawa at the Council of Economic and Fiscal Policy, a top government panel that will kick off this week and meet at least once a month to map out long-term fiscal and economic policies.
“As long as there’s talk (on monetary policy) at the council meetings, there’s no need to issue a policy accord (with the BOJ),” Aso told public broadcaster NHK.
His remarks suggest the government will not necessarily demand issuing a joint statement with the BOJ on measures to beat deflation, as long as the central bank sets a higher inflation target for itself.
“What’s important is for the government and the BOJ to share a price target and show markets our determination of achieving it,” Economics Minister Akira Amari also told NHK.
Amari also said that, while the government’s short-term priority would be to boost the economy with fiscal stimulus, it would debate setting a long-term fiscal discipline target to ensure markets of its efforts to fix Japan’s worsening finances.
The BOJ set a 1 per cent inflation target in February and eased monetary policy five times last year via an increase in asset purchases in an effort to beat deflation that has plagued the country for much of the past 15 years. — Reuters