BOJ can do more on deflation: PM candidate aide

By Chisa Fujioka

TOKYO (BestGrowthStock) – The Bank of Japan is doing too little to fight deflation, but the central bank’s policies alone cannot solve the problem, an aide to a ruling party powerbroker challenging Prime Minister Naoto Kan said on Monday.

Ichiro Ozawa is challenging Kan in a Democratic Party of Japan (DPJ) leadership election on September 14 in a race that is too close to call. The winner will likely be prime minister by virtue of the DPJ’s majority in the powerful lower house.

Lower house lawmaker Banri Kaieda, member of a group advising Ozawa on policies, said Ozawa was trailing Kan “6 to 4.” While Ozawa heads the biggest group of DPJ lawmakers, he has a scandal-tainted image that could affect the outcome.

Both camps have vowed to be proactive on fighting deflation and the yen’s rise, but Kaieda said the BOJ’s remaining policy options were limited.

“It is not enough,” Kaieda told Reuters in an interview when asked if the BOJ was taking sufficient action against deflation.

“But it’s clear that this issue will not be resolved with just the BOJ’s policies alone,” said Kaieda, chair of the lower house committee on financial affairs.

Bowing to government pressure, the BOJ eased policy last week by boosting a cheap loan scheme, although the move did little to deter yen gains or falls in stock prices as investors saw it as a symbolic gesture that had barely any effect in supporting growth.

Kaieda said one possibility in the future was for the central bank to buy more government bonds.

(Additional reporting by Yuko Yoshikawa; Editing by Ron Popeski)

BOJ can do more on deflation: PM candidate aide