Bank of Japan hits out at critics of its hard-won independence

Ben Southwood
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THE BANK of Japan yesterday stood resolute against calls to flood the economy with money in order to achieve its inflation target, stressing the importance of its political independence.

It kept its asset buying programme steady after last month’s increase to 91 trillion yen (£0.7 trillion), dismissing calls for unlimited quantitative easing from the Bank from opposition leader Shinzo Abe, widely tipped to become the country’s next premier in December’s election. Abe, leader of the Liberal Democratic Party, had also proposed reviewing legislation surrounding the central bank.

“Central Bank independence is a system created upon bitter lessons learned from the long economic and financial history in Japan and overseas countries,” said Bank governor Masaaki Shirakawa at a news conference.

“Any debate on revising something like the BOJ Law, which lays the foundations of Japan’s economic and financial system, must be done carefully, spending a good amount of time.”

Shirakawa has not just had to face down opposition critics – the government has joined Abe in calling for more intervention, though it has not gone as far as recommending the radical policies favoured by the opposition leader, which include boosting the inflation target to three per cent and guaranteeing bonds to fund fiscal stimulus.

But analyst Yasuo Yamamoto at Mizuho Research Institute predicted the pressure would force the BOJ to act in their next meeting.