CORRECT: Japan Hatoyama, Bank of Japan Chief To Meet This Week
(A report published at 10:30 p.m. EST should not have identified the Bank of
Japan Chief as a government minister in the headline. The correct headline is
attached.)
TOKYO -(Dow Jones)- Japan's prime minister and central bank chief are planning
to meet this week to discuss problems that are threatening a fragile recovery in
the country's economy, senior vice financial services minister Kohei Otsuka said
Saturday.
Prime Minister Yukio Hatoyama and Bank of Japan Gov. Masaaki Shirakawa may
hold talks as early as on Tuesday to exchange opinions about problems such as
the yen's recent jump and the country's deepening deflation, according to local
media reports Sunday.
The planned discussion could add to speculation that the government may pile
more pressure on the BOJ to do more to protect Japan's fragile recovery from its
worst postwar recession.
Hatoyama's Cabinet is pinning its hopes on the central bank as the nation's
huge debt and voters' calls for cuts in government borrowing make it difficult
to aggressively boost budgetary spending to buttress growth. Deputy Prime
Minister Naoto Kan has recently urged the bank to "follow through with its
monetary policies" as it is a "bit too early [for the BOJ] to implement any exit
strategies."
The BOJ's next monetary policy meeting is scheduled for Dec. 17-18. With the
bank's interest rates already at a very low 0.1%, analysts are watching whether
the BOJ will signal willingness to take additional steps such as boosting the
amounts of its government debt purchases in efforts to pump more cash into
markets to lift bank lending and economic growth.
The prospect of another downturn is preventing the BOJ from joining central
banks in countries like Australia and Norway that have started raising borrowing
costs amid strong recovery in their economies.
Japan's economy, the world's second largest, has posted stronger-than-expected
4.8% annualized growth in the third quarter. But much of the gain stemmed from
government stimulus, and worries remain that falling prices and a surging yen
could snuff out the rebound.
The dollar fell briefly to a 14-year low of Y84.82 Friday amid jitters over
the health of global financial markets. A stronger yen hurts Japan's economy by
making its exports more expensive abroad while it lowers the yen value of
foreign currencies earned by Japanese firms through exports.
"There is a mounting need for monetary accommodation, in addition to dollar-
buying intervention, as a response to yen appreciation," said Chotaro Morita, an
analyst at Barclays Capital.
Japan's core consumer price index fell 2.2% on year in October, marking the
eighth straight month of decline, according to the latest available data.
Persistent price declines hamper economic growth by raising the real debt burden
of consumers and businesses and weighing on corporate revenues.
Another problem confronting Tokyo is its soaring budget deficit, which
analysts say could cause long-term interest rates to rise in the future to the
detriment of growth.
With tax revenues rapidly shrinking in Japan, Yoshito Sengoku, minister in
charge of administrative reforms, said during a TV program Sunday: "My
conclusion is that it won't be easy" to meet the government's promise to keep
the amount of new debt issuance below Y44 trillion in the next fiscal year
starting April. That pledge was made by Hatoyama and Finance Minister Hirohisa
Fujii.
Sengoku's comments come after Senior Vice Finance Minister Yoshihiko Noda said
during his TV appearance Saturday that there's "no doubt that tax receipts will
be below Y40 trillion" in fiscal 2010. That figure--which is generally
considered low--has added to expectations that Japan's fresh debt sale might top
Y44 trillion next fiscal year without aggressive belt-tightening.
-By Takashi Nakamichi, Dow Jones Newswires; 813-6895-7558; takashi.nakamichi@
dowjones.com
(END) Dow Jones Newswires
11-28-092252ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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