The Bank of Japan will ease monetary policy this week and consider adopting a 2 percent inflation target no later than in January, sources say, responding to pressure from next Prime Minister Shinzo Abe for stronger efforts to beat deflation.
Turning up the heat, Abe made a rare, direct push for a higher inflation target when BOJ Governor Masaaki Shirakawa visited the headquarters of his Liberal Democratic Party (LDP) on Tuesday.
"I told him that during my election campaign, I called for setting a policy accord with the BOJ and a 2 percent inflation target," Abe told reporters. "The governor just listened," he said when asked how Shirakawa responded.
The LDP swept to power in Sunday's lower house election after campaigning for big fiscal spending to revive the economy and "unlimited" monetary easing to achieve higher inflation in a country mired in deflation for the past 15 years.
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