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Thursday, Jan. 10, 2013

Abe convenes council to prod Bank of Japan to accept LDP's inflation target


Staff writer

Prime Minister Shinzo Abe on Wednesday convened his first meeting of the Council on Economic and Fiscal Policy, calling on the Bank of Japan to set the 2 percent inflation target his Liberal Democratic Party promised during its successful campaign to return to power in last month's general election.

The council also said it will compile a mid- to long-term economic and fiscal policy by June and set the pillars for the fiscal 2013 budget in the next meeting.

Wednesday was the first time in almost 3½ years that the council convened. Established in 2001, the panel's task was to set mid- to long-term economic goals when the LDP was in power. It was dormant after the Democratic Party of Japan ousted the LDP from power in the 2009 general election, only to be revived when the LDP trounced the DPJ in the Dec. 16 Lower House poll.

The council and the Economic Revitalization Headquarters, which debuted Tuesday, are to serve as key bodies to implement economic and fiscal strategies intended to steer Japan out of a decade of deflation and repeated recession.

The 11-member council is also expected to serve as a key channel of communications between the government and the Bank of Japan, because BOJ Gov. Masaaki Shirakawa is one of its sitting members. Others include Abe's ministers handling economic and fiscal policies, business leaders and academics.

At the council's first meeting, Abe said the government will keep pressing the BOJ to adopt the 2 percent inflation target, noting it is important for the central bank and the ruling bloc to coordinate closely to achieve this goal.

"We would like to enhance the coordination and cooperation with the BOJ by utilizing the council," Abe said.

Shirakawa replied that the BOJ has been taking the necessary steps and will continue to work based on the discussions at the council. The central bank is scheduled to hold a two-day monetary policy meeting starting Jan. 21.

Right after the Dec. 16 election, Abe called on Shirakawa to sign an accord to hold the BOJ more accountable for monetary and fiscal policy by setting the inflation target. Abe's move was criticized as effectively trying to curb the central bank's independence.

After the meeting, economic revitalization minister Akira Amari claimed Abe will respect the BOJ's independence. Amari also said he and Finance Minister Taro Aso, together with the central bank, will come up with the best way to improve coordination.



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