Bank of Japan (BOJ) Governor Toshihiko Fukui downplayed any rift between the central bank and government officials amid debate over the timing of when to start tightening Japan's ultra-loose monetary policy now that the long-stagnant economy is gaining steam.
"I don't think there is any discrepancy now, and I don't think there will be one going forward," Fukui told reporters at a press conference yesterday.
"The government and the BOJ may have different areas of policy management ... but there is no difference in the basic view that economic growth amid price stability is desirable," he said.
Under government pressure not to choke off the recovery, the Bank of Japan policy board voted 7-2 earlier yesterday to leave its ultra-loose monetary policy unchanged because consumer prices are still declining.
Since March 2001, the central bank has maintained a quantitative easing that targets short-term interest rates near zero and floods the financial system with ever larger amounts of cash.
But BOJ officials have talked in recent weeks about starting to tighten monetary policy as early as next spring if the core consumer price index starts rising stably and a sustainable economic seems to be underway.
Such talk prompted criticism from government officials, who saw it as threatening the government's anti-deflationary policies. Finance Minister Kaoru Yosano pointedly remarked on Tuesday that BOJ Law says central bank and government policies must be consistent with each other.
Chief Cabinet Secretary Shinzo Abe reiterated the government's stance yesterday morning.
"As our policy goal, we aim to break out of deflation. Within this process, we would want the Bank of Japan to cooperate as well toward our policy goal, including our policy on quantitative easing," Abe told reporters.
Despite the discord, yesterday's decision was in line with market expectations because the majority of the board still sees that economic and financial market conditions don't warrant changes.
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