— Recasts With Comments After BOJ Meeting, Background

TOKYO (MNI) – Economic and Fiscal Policy Minister Seiji Maehara on
Friday said he will continue urging the Bank of Japan to conduct what it
calls “powerful monetary easing” in order to help the economy overcome
years of deflation “as soon as possible.”

He also told reporters that now he is a member of the cabinet, he
cannot press ahead with his demand that the BOJ buy foreign bonds
without seeking government consensus, compared to the time when he was a
senior policymaker at the ruling Democratic Party of Japan.

Maehara attended the BOJ’s policy board meeting on Friday,
expressing his views as an observer toward the end of the two-day
policy-setting meeting.

“I have strong concerns about the lingering appreciation of the yen
and deflation. I attended today’s BOJ meeting to express such concerns
of mine,” he told reporters.

He declined comment on any remarks made by himself or other
officials who were at the BOJ board meeting today.

The Ministry of Finance and the Cabinet Office each sends a senior
government official to every BOJ policy meeting, usually a deputy
minister or a high-ranking bureaucrat, not a cabinet minister.

Maehara said he plans to attend more BOJ policy meetings as his
schedule permits.

In February, the BOJ board adopted a more explicit “goal” to guide
consumer inflation toward 1% in the longer term. It has raised the
target for its financial asset buying to Y80 trillion through three
increases this year.

The central bank has also vowed to maintain practically zero
interest rates until it sees a clearer prospect for a stable 1%
year-on-year rise in the consumer price index.

Earlier this year Bank of Japan Governor Masaaki Shirakawa said
Japan may be able to hit a 1% CPI rise in fiscal 2014, but last month he
said the global slowdown is delaying a domestic economic recovery for
six months, without providing his outlook on prices.

The BOJ board on Friday voted unanimously to leave the target of
its financial asset-buying program at Y80 trillion after raising it from
Y70 trillion about two weeks ago.

The board also decided unanimously to keep its zero interest
policy, leaving its target for the overnight interest rate among
commercial banks at zero to 0.1% since October 2010, when it lowered it
from 0.1% as part of “comprehensive monetary easing.”

But in the face of the lingering global economic slowdown, the BOJ
revised down its assessment for the second month in a row, saying,
“Japan’s economic activity is leveling off more or less.”

Maehara, who took office after a cabinet reshuffle on Monday, has
repeatedly urged the BOJ to conduct bold policy measures in order to
help Japan overcome years of deflation, including purchases of foreign
bonds by the central bank, which in theory can ease the yen’s rise
against other currencies.

Finance Minister Koriki Jojima, a DPJ lawmaker who also joined the
cabinet on Monday, said this week that the government needs to be
cautious about considering whether to revise the law and allow the BOJ
to buy foreign bonds.

tokyo@mni-news.com
** MNI Tokyo Newsroom: 81-3-6860-4822 **

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