Japan LDP Abe Wants New Governor of BOJ to Support 2 Percent Inflation Target

Liberal Democratic Party (LDP) President Shinzo Abe said he wants someone in support of his party’s 2 percent inflation target to assume the Bank of Japan leadership, while promising to decide next fall whether to implement the consumer tax hike, following his party’s sweeping victory in the House of Representatives election on Dec. 16.

During TBS Radio and other programs on the evening of Dec. 16, Abe remarked about successors to the BOJ governor and deputy governor, whose terms will expire next spring, saying, “I want those who support the LDP’s consumer price increase target of 2 percent to assume those posts.”

Abe also stated that the government’s Council on Fiscal and Economic Policy, which has been suspended since the Democratic Party of Japan (DPJ) took the reins of government in 2009, will be resumed, with the BOJ governor taking part in its discussions. Abe showed a desire to make the council a forum for lifting Japan out of its ongoing deflation by calling on the BOJ to implement radical monetary easing measures.

The BOJ had earlier decided to maintain monetary easing measures until the consumer price is certain to increase by 1 percent from the previous year. Now that Abe has mentioned the conditions for the BOJ governorship, the central bank will effectively be forced to adopt an even more powerful monetary relaxation policy, including its purchase of an increased amount of long-term government bonds.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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