Cabinet ministers voiced expectations Tuesday that the government and the Bank of Japan will cooperate more closely to combat deflation following Monday’s nomination of Toshihiko Fukui as the new BOJ chief.
Finance Minister Masajuro Shiokawa and Economy, Trade and Industry Minister Takeo Hiranuma told separate news conferences that the former deputy BOJ governor’s nomination was “appropriate,” while Financial Services Minister Heizo Takenaka said the government hopes to establish closer cooperation with the central bank in the fight against deflation.
Shiokawa characterized the distance he has seen between the government and the BOJ as “a curtain hanging between them.”
But the nomination of Fukui and his two deputies “will make it easier for the government to build direct cooperation,” he said.
Hiranuma said he expects Fukui to tap his extensive experience in monetary circles to help money flow to every corner of the economy, a prerequisite he says to turning around persistent price falls.
Takenaka meanwhile suggested the government should consider forming a monetary policy accord with the central bank under the leadership of Fukui as part of efforts to stem deflation.
“I think (the government and the BOJ) will find specific ways to cooperate after promoting discussions” with the new leaders, Takenaka told reporters when asked if the government will consider launching such an accord.
Current Gov. Masaru Hayami, whose five-year term expires March 19, has rebuffed calls for formulating a policy accord with the government. saying the two are already cooperating sufficiently.
Takenaka also said the government and the BOJ should promote discussions on ways to combat deflation, without ruling out the possibility of introducing inflation targeting.
The two sides should not focus their attention on inflation targeting as an issue, he said. “But we must promote discussions on specifics (to combat deflation) at various occasions.”
Fukui is believed to be skeptical about setting an inflation target to shore up the struggling economy.
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