Gov't, BOJ confirm they will fight deflation in integrated manner+

TOKYO, April 9 Kyodo -
Prime Minister Yukio Hatoyama and Bank of Japan Governor Masaaki Shirakawa
confirmed Friday that the government and the central bank will deepen efforts
to coordinate their policies to overcome the prolonged period of deflation the
economy is undergoing.
To this end, the prime minister and the BOJ chief agreed to hold regular talks
every three months or so, they said, after holding a direct dialogue earlier in
the day for the first time since early December.
The government will make ''utmost efforts'' to pull the nation out of
deflation, Hatoyama told reporters. ''We agreed to work together.''
Shirakawa said separately they exchanged opinions on the economic and financial
conditions, denying that the government made a policy request to the central
bank during the meeting.
''I do not think there is a gap in our basic views on the economic and
financial conditions,'' Shirakawa said after the one-and-a-half hour meeting
held at the prime minister's office.
Finance Minister Naoto Kan, Chief Cabinet Secretary Hirofumi Hirano and BOJ
Deputy Governor Hirohide Yamaguchi also took part in the meeting.
Regular talks between the heads of the administration and the central bank had
been stalled since the current Democratic Party of Japan-led government
scrapped the Council on Fiscal and Economic Policy, a key panel under the
previous government led by the Liberal Democratic Party.
Hatoyama and Shirakawa last met officially on Dec. 2, in the wake of the
dollar's rapid fall to the 84 yen range, a 14-year low, amid heightening
concerns over debt problems in Dubai, and causing worries that the
strengthening yen would hurt the export-dependent Japanese economy.
Friday's meeting was thus aimed at putting forward their stance of sharing
views on the economy and coordinating policies to fight deflation.
The central bank said in a report released in January that Japan is expected to
experience deflation for at least three years through fiscal 2011 ending March
2012.
With its strained fiscal condition, and in the run-up to the upper house
election in the summer, the government has been seen as escalating its pressure
on the BOJ to do more to help turn around the economy.
In a response, the BOJ decided in March to double a three-month loan program to
banks. But in its latest policy review earlier this week, the BOJ held off on a
new easing move and kept its key interest rate on hold at a razor-thin 0.1
percent.
Analysts say government pressure may increase, especially if financial markets
encounter further turbulence, since the number of tools the government has at
its disposal to support the economy is limited due to the nation's huge fiscal
debt.
Hatoyama said after Friday's meeting that although the government intends to
work hard to end the continued price declines, it also acknowledges the need to
restore Japan's financial health.
==Kyodo
2010-04-09 23:36:26


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