Ministers hint BOJ warming to 2% inflation target

Kyodo

Members of Prime Minister Shinzo Abe’s Cabinet hinted Friday that the Bank of Japan is moving closer to setting a 2 percent inflation target in a joint statement on policy coordination aimed at conquering deflation.

“Things are going in a good direction,” economic and fiscal policy minister Akira Amari said at a news conference after meeting with BOJ Gov. Masaaki Shirakawa and Finance Minister Taro Aso. “I feel that (the content of the statement) is coming close to what the prime minister thinks.”

The two ministers and Shirakawa met in the morning to make final arrangements on what to say in the joint written agreement, expected to be released early next week, on policy coordination advocated by Abe, who has put pressure on the BOJ to carry out bold monetary easing until 2 percent inflation is achieved.

Discussions between the government and the BOJ “have made much progress,” Aso said at a separate news conference.

The BOJ is scheduled to start a two-day Policy Board meeting Monday, during which it will make a final decision on whether to adopt such a written agreement with the government.

Aso said the government and the bank will write the joint statement after “the policy meeting ends Tuesday.”

On Friday, the two sides are believed to have discussed whether the BOJ will commit to strengthening its monetary easing and the government will pledge to promote growth strategies by regulatory reforms as part of their efforts to attain the new inflation target.

Aso said monetary policy alone “has been unable to” beat deflation.