adminThe two-day meeting is widely expected to see the central bank launch another round of easing, and bow to government demands that it set a two-percent inflation target in a bid to vanquish the deflation that has haunted the world’s third largest economy for years.
If the BoJ inflates its 101 trillion yen (US$1,13 trillion) asset-buying programme it will mark the first time in nearly a decade that the bank has expanded monetary policy after two consecutive policy meetings.
It would also be the BoJ’s fourth major move since September after its counterparts in Europe and the US ushered in huge measures to battle slowing growth.
The programme is the BoJ’s main policy tool with interest rates at near zero, but analysts are not convinced another expansion will be enough for Japan’s new leader.
Daisuke Karakama, senior market economist at Mizuho Corporate Bank, said an expected 10 trillion yen boost to the programme, after an expansion of the same amount in December, “would be just an extension of what the BoJ has been doing and might not be enough to satisfy Prime Minister Abe”.
National Australia Bank said the expected move would “underwhelm and probably send the (yen) higher”.
Tensions have risen between BoJ policymakers and the administration of Shinzo Abe, whose Liberal Democratic Party swept national elections last month, as the hawkish leader piled on the pressure for more action from the bank.
The 58-year-old premier has openly said he would like to turf out BoJ Governor Masaaki Shirakawa, whose terms ends in April, and threatened to change a law mandating the bank’s independence if it doesn’t fall into line.
Japan’s new finance minister, Taro Aso, has also weighed in, accusing the bank last month of being “slow in its response to deflation”.
“Let’s stop the mindset that ‘We didn’t make mistake’ . . . we have to take measures seriously to end deflation,” he was quoted as saying in his inaugural address to finance ministry officials.
Also, the BoJ’s chief and economic revitalisation minister Akira Amari were reportedly to hold a rare joint Press briefing today. — AFP.
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