Published December 21, 2012
TOKYO – An aide to Japan's next Prime Minister Shinzo Abe said on Friday that there would be no need to revise the Bank of Japan law as long as the central bank met the party's expectations for a 2 percent inflation target and more aggressive monetary easing.
Abe, whose Liberal Democratic Party won last weekend's election by a landslide, has put the central bank's independence on the line by repeatedly calling for a binding 2 percent inflation target, double its current price rise goal.
"I think there is no need to revise the law if the BOJ takes measures that we have been seeking," Katsunobu Kato, special assistant to Abe, told Reuters in an interview.
Abe has put the BOJ at the center of political debate by calling for bolder easing and saying he would revise the law guaranteeing its independence. But some lawmakers are wary of tampering with central bank independence.
Kato's comments, however, suggest Japan's new premier could back away from some of his more controversial pledges to reform the way the government and the BOJ work together.
Kato is a member of the lower house close to the incoming prime minister.
In his comments, he also said he hoped the BOJ would set up a 2 percent inflation goal in the form of a policy agreement with the new government when it compiles emergency economic stimulus measures around mid-January.
"If the BOJ adopts the steps at the same time, the overall package will have more impact," he said, stressing this was his personal view.
Kato, a former finance ministry official, said he expected the central bank to take bold measures to meet the 2 percent goal and ease policy to the same degree as the U.S. Federal Reserve and the European Central Bank.
The BOJ has scheduled its next policy meeting for January 21-22.
On Thursday, the BOJ delivered its third shot of monetary stimulus in four months, in a prelude to more aggressive action next year as it faces intensifying pressure from the country's next leader for bolder action to beat deflation.
(Additional reporting by Stanley White; Editing by Edwina Gibbs and Ron Popeski)
(This story was corrected in the tenth paragraph on BOJ's January meeting date)