Finance Minister Masajuro Shiokawa said Tuesday he would not be calling on the Bank of Japan to further ease its monetary grip during the latest meetings of the BOJ Policy Board.
“Instead of further easing monetary policy, I want the BOJ to maintain its current policy,” Shiokawa said with regard to the meetings Tuesday and today. “I want the BOJ to consult closely with commercial banks over ways to maximize the effects of the current policy.”
Meanwhile, Heizo Takenaka, state minister in charge of economic and fiscal policy, told reporters that he would attend today’s meeting in order to bolster cooperation between the government and the central bank in the fight against deflation.
“I want to set the stage for the government and the central bank to share strong determination (to overcome deflation),” he said.
The BOJ is not expected to make any major policy changes at the meetings.
At its last meeting in late February, the central bank relaxed its monetary policy further by increasing its outright purchases of long-term government bonds to boost the supply of funds to the banking system. It decided to increase the purchases from 800 billion yen to 1 trillion yen per month, in line with a call from Shiokawa before the February meeting.
Tax hike ruled out
Heizo Takenaka, state minister in charge of economic and fiscal policy, said Tuesday there should be no tax hikes under the current economic conditions.
“Given the Japanese economic conditions, it is not possible for us to choose to increase the tax burden,” he told a news conference.
Takenaka’s remark comes as the Finance Ministry seeks additional revenue sources within the context of overall tax reforms, which will be discussed in full by the government’s Tax Commission.
Takenaka said the government is prioritizing the restoration of a primary balance in its finances, noting there are several policy options to achieve this goal.
In a state of primary balance, government spending equals revenues, excluding debt-servicing costs and government bond revenues.
The Council on Economic and Fiscal Policy, chaired by Prime Minister Junichiro Koizumi, is expected to come up with a basic policy on tax reform in June.
Budget date set
The House of Councilors Budget Committee decided unanimously Tuesday to proceed with the final detailed examination of the 81.23 trillion yen fiscal 2002 budget today and Friday, paving the way for it to clear the Diet on March 27.
The Upper House is set to vote on the budget at a plenary session immediately after the committee holds final deliberations March 27.
The House of Representatives endorsed the budget on March 7.
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