Japan’s new government gets cash boost from central bank

 
City A.M. Reporter
THE BANK of Japan delivered its third shot of monetary stimulus in four months yesterday, 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.

It also signalled setting a higher inflation target at its next meeting in January, when a new government will be in place.

Shinzo Abe, whose opposition Liberal Democratic Party (LDP) won Sunday’s election, has put the central bank’s independence on the line by calling for a binding two per cent inflation target, double its current price goal.

Feeling the heat, the central bank expanded its asset-buying and lending programme by 10 trillion yen (£73bn) to 101 trillion yen, a widely expected move that barely moved markets.

“I take it as that the BoJ is carrying out what we sought during the election step-by-step,” Abe told a party meeting.

The incoming PM caused a brief stir when he said that BoJ governor Masaaki Shirakawa had telephoned to inform him of the decision in the morning – when the policy meeting was still taking place. The LDP later said the remark was a slip of the tongue and Shirakawa told a news conference he made the call in the afternoon, after the meeting was over.