TOKYO (MNI) – Japanese Prime Minister Yoshihiko Noda on Friday said
governments must honor central bank independence, countering remarks by
the leader of the main opposition party ahead of national elections next

Noda also told reporters after dissolving the lower house of
parliament a few hours earlier that his administration has been keeping
in close contact with the Bank of Japan, seeking to overcome years of

“If the government sets a target for monetary policy, ignoring the
wisdom Japan and other countries have gained, a problem will arise,” he

Noda was asked to comment on harsh remarks on the BOJ by Shinzo
Abe, who has recently returned to head the main opposition Liberal
Democratic Party after giving up his premiership five years ago
due to poor heath.

“We want to conduct monetary policy boldly, by taking into account
the possibility of revising the Bank of Japan Act,” Abe, who is
considered to be a strong candidate for the new prime minister after
general elections on Dec. 16, told reporters.

On Thursday, Abe said the biggest concern for Japan is prolonged
deflation and a strong yen and called for “unlimited” monetary easing by
the BOJ and a reduction in the policy rate to zero or below zero from
the current range of zero to 0.1%.

Recent remarks by the ring-wing politician spurred expectations for
more pro-active monetary easing by the BOJ, sending the yen to Y81.46
against the dollar on Thursday, the weakest level since April 25, when
it stood at Y81.69.

Abe has also urged the BOJ to set a target for achieving 3%
inflation, instead of the bank’s interim goal of 1% consumer price
rises. The year-on-year change in Japan’s CPI has been depressed around

By contrast, Noda has been speaking in general terms, saying he
expects the BOJ to continue taking “decisive” monetary policy actions in
a timely manner.

Noda stressed that he and BOJ Governor Masaaki Shirakawa has been
comparing notes regularly.

After the BOJ’s policy-setting meeting on Oct. 30, Shirakawa,
together with Economic and Fiscal Policy Minister Seiji Maehara and
Finance Minister Koriki Jojima, released a rare joint statement,
pledging to do their best to overcome deflation.

While the BOJ vowed to continue its monetary easing until prospects
for its longer-term goal of 1% inflation emerge, it also urged the
government and “a wide range of economic agents, such as business firms
and financial institutions” to push up the economy’s growth potential.

In response, the government said it will implement deregulation and
conduct budgetary and tax measures, which it believes will create an
economy that can sustain deflationary pressures better.


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