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Central bank chief in Japan to battle growing deflation

Japan's next central bank chief needs to set a target for raising consumer prices as a four-year slide saps business growth in the world's second-largest economy, a top ruling party official said.

"What we're facing now is an emergency situation," Taku Yamasaki, the Liberal Democratic Party's secretary-general, said in an interview with Bloomberg News. "We need someone with a strong personality even if it's a little overbearing."

"We don't need to have an agreement with the Bank of Japan to set the target if we can communicate well," Yamazaki said on Japan's NHK television program "Sunday Debate."

The decision is still ``open,'' said Yamasaki, who denied a Yomiuri newspaper report on Dec. 19 that he recommended former central bank board member Nobuyuki Nakahara, an advocate of inflation targeting. "I haven't recommended anyone for the post," he said.

Financial Services Minister Heizo Takenaka and other top government officials have put pressure on the central bank to adopt an inflation target -- setting a goal for prices to rise, and pumping money into the banking system until it's met.

Falling prices have squeezed profits and made it harder for companies to pay debt. Japanese consumer prices, excluding fresh food, haven't risen annually since April 1998. In December, Tokyo core prices fell 0.7 percent from a year ago.

"To overcome a possible crisis, monetary policy is the last resort as the government has done pretty much all it can do now, especially on fiscal and tax-related policies," Yamasaki said during a speech in his electoral district in Fukuoka, southern Japan.
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