Japan would-be PM’s plan ‘reckless’, says business leader
Plans by Japan’s prime ministerial front-runner to force the central bank to buy government bonds have been criticised as “reckless” by the head of a major business lobby.
Opposition leader Shinzo Abe called for “unlimited” central bank easing and told supporters earlier this month he would make the Bank of Japan participate in his bond-buying scheme – effectively printing money to generate inflation.
Japan has been mired in deflation for years, a situation that discourages consumers from spending in the knowledge that products will be cheaper in the future, sapping demand and dissuading firms from investing.
But the plan has been criticised from all quarters and on Monday, Hiromasa Yonekura, the chairman of Keidanren (Japan Business Federation), a habitual ally of Abe’s Liberal Democratic Party, joined the chorus.
“It’s reckless rather than bold,” he said, according to media reports Tuesday.
To force the central bank to buy government bonds “could create a problem with the international credibility” of Japanese government bonds, Yonekura told reporters in a rare criticism against the leader of the business-friendly LDP.
“I don’t think the market is moving because of President Abe’s comments,” Yonekura continued, referring to the recent depreciation of the yen which has been attributed to market expectations that Abe would press for aggressive monetary policy as prime minister.
“Rather, the cheaper yen is the fruit of the BoJ’s additional monetary easing,” Yonekura said.
The influential business lobby has traditionally had close ties with the LDP but Yonekura said it will now support parties “based on policies.”
Last week, Bank of Japan chief Masaaki Shirakawa slapped down Abe’s challenge to the central bank’s independence, dismissing his fix for the economy.
Abe later appeared to be rowing back from a strident call for the Bank of Japan to buy government debt.
Using his Facebook page, Abe said “I’m not saying (the Bank of Japan) should directly purchase government bonds.”
“I’m saying the purchase should be done through market operations,” he wrote.
