BOJ 'asleep at wheel' over economy
By Stanley White |
November 25, 2009, Wednesday
|
Print Edition
Print Edition
JAPANESE cabinet ministers increased pressure on the Bank of Japan yesterday to respond to deflation, with one saying the central bank was "asleep at the wheel."
The government last week declared the country had entered its second bout of deflation in less than a decade as a public battle brews between the administration and the BOJ over the economy. Each says the other should play a greater role in battling deflation, which is forecast to dog the economy for several years, raising fears of another recession. Economists say options are limited for both.
The government has criticized the BOJ for having too rosy a view on the economic outlook, and Japanese banking minister Shizuka Kamei, a strident critic of the central bank, kept up the attack yesterday.
"The situation is serious," said Kamei, leader of a small political party in the government coalition.
"The Bank of Japan is asleep at the wheel as usual," he told reporters after a cabinet meeting. "Because the BOJ is independent, we can't simply lash out and wake it up. In that context, the government's role is very important."
For the government's part, having the worst public debt burden among industrialized countries at about 170 percent of gross domestic product leaves it little leeway to splash out on stimulus to keep the economy growing.
The BOJ may face pressure to increase its purchases of government debt -- pumping more cash into the economy -- but economists say that may not close a large gap between supply and demand weighing on consumer prices.
The BOJ on Friday upgraded its assessment of the economy despite grumblings from the government, which said Japan's economy was experiencing mild deflation.
The government last week declared the country had entered its second bout of deflation in less than a decade as a public battle brews between the administration and the BOJ over the economy. Each says the other should play a greater role in battling deflation, which is forecast to dog the economy for several years, raising fears of another recession. Economists say options are limited for both.
The government has criticized the BOJ for having too rosy a view on the economic outlook, and Japanese banking minister Shizuka Kamei, a strident critic of the central bank, kept up the attack yesterday.
"The situation is serious," said Kamei, leader of a small political party in the government coalition.
"The Bank of Japan is asleep at the wheel as usual," he told reporters after a cabinet meeting. "Because the BOJ is independent, we can't simply lash out and wake it up. In that context, the government's role is very important."
For the government's part, having the worst public debt burden among industrialized countries at about 170 percent of gross domestic product leaves it little leeway to splash out on stimulus to keep the economy growing.
The BOJ may face pressure to increase its purchases of government debt -- pumping more cash into the economy -- but economists say that may not close a large gap between supply and demand weighing on consumer prices.
The BOJ on Friday upgraded its assessment of the economy despite grumblings from the government, which said Japan's economy was experiencing mild deflation.
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