Japan PM urges BOJ to make good on promise of bolder action

TOKYO (REUTERS) - Japanese Prime Minister Shinzo Abe, vowing to overcome what he called an economic crisis facing the nation, urged the Bank of Japan (BOJ) today to hit its inflation target as soon as possible, keeping up pressure on the central bank to make good its promise of bolder action to overcome deflation.

In his first policy speech to parliament since returning to office last month, Mr Abe - in a clear reference to a feud with China - also promised to "firmly protect" Japan's lands, seas and air space while strengthening ties with the United States.

Mr Abe has made reviving the stagnant economy with a mix of hyper-easy monetary policy and fiscal spending his top priority since his Liberal Democratic Party (LDP) returned to power with a huge election win in December. The push is helping him gain support from more than two-thirds of Japanese voters after one month in office, a Nikkei business daily poll showed today.

Last week, bowing to intense government pressure, the BOJ doubled its inflation target to 2 per cent, made an open-ended commitment to buy assets, and issued a joint statement with the government promising to meet the price goal at the earliest possible time.

"It is important for the government and the BOJ to implement the content of the joint statement with their own responsibility, including swift achievement of the 2 per cent inflation target on the part of the BOJ," Mr Abe said.

"Japan cannot beat deflation and the strong yen if we respond in the same way as in the past. That's why I present a bolder policy package," he said, starting a 150-day session of parliament, his handling of which is key to whether the LDP can win a July upper house election and Mr Abe last longer than his revolving-door predecessors.

Citing economic revival as the most pressing task for Japan, Mr Abe vowed to map out a growth strategy to boost private investment and consumption, after rolling out US$117 billion (S$145 billion) in spending in the biggest stimulus since the global financial crisis.