The Straits Times
Published on Nov 26, 2012

BOJ rift surfaces over easing as political debate heats up


TOKYO (REUTERS) - A split within the Bank of Japan was laid bare on Monday, with newcomers to its board pressing to strengthen commitment to an ultra-loose policy, as pressure on the central bank for bolder action intensified in the run up to next month's election.

Shifting the debate away from the central bank, BOJ Governor Masaaki Shirakawa repeated his view that monetary easing alone cannot beat deflation, urging the government pursue fiscal reform and deregulation to boost domestic investment.

But minutes of the Oct 30 meeting of the nine-member board released on Monday showed Mr Takehiro Sato, one the newcomers, had suggested a more activist stance on monetary expansion once Shirakawa's term ends in April.

The conduct of policy became one of the most heated areas of political debate ahead of the Dec 16 election after Mr Shinzo Abe, the leader of the opposition Liberal Democratic Party and likely next prime minister, called for the central bank to adopt negative interest rates among other radical measures.