The Bank of Japan faces increased pressure to step up easing in coming weeks as political leadership changes and pessimism among manufacturers fuel calls for more aggressive action to end deflation and revive growth.
BOJ policy makers meet today for the first time since Seiji Maehara was named economy minister Oct. 1 and Shinzo Abe became leader of the opposition Liberal Democratic Party last month. Maehara is pushing the BOJ to consider buying foreign bonds and says he may attend policy meetings, while Abe wants an inflation rate of 3 percent, up from the BOJâ€™s current 1 percent goal.
The calls reflect mounting signs Japanâ€™s economy is in a contraction, the limited fiscal scope for politicians to boost growth and jockeying for support ahead of elections. While the BOJ is projected to leave policy unchanged tomorrow after expanding its asset-purchase fund last month, the political shift underscores forecasts for further BOJ steps by year-end.
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