物価目標検討 政府・日銀はデフレ脱却急げ

The Yomiuri Shimbun (Dec. 22, 2012)
Govt, BOJ must move quickly to defeat deflation
物価目標検討 政府・日銀はデフレ脱却急げ(12月21日付・読売社説)

The inauguration of a Liberal Democratic Party-led government next week will mark the first step for the government and the Bank of Japan to close ranks and work toward leading Japan out of deflation.

The central bank decided Thursday to look into the possibility of introducing an inflation target.

At a news conference the same day, Gov. Masaaki Shirakawa said he would make a final decision on the matter in January. He said the central bank had decided to study the matter in response to a request from LDP President Shinzo Abe.

Currently, the central bank is aiming for a 1 percent inflation target but this goal is not set in stone.

Abe had called for the government and the central bank to reach an accord on a 2 percent inflation target and implement drastic monetary easing policies.

The central bank should be praised for responding promptly and deciding to study setting an inflation target.

The bank has also decided on an additional monetary easing package worth 10 trillion yen. As a result, the bank's fund to purchase government bonds and other assets will exceed 100 trillion yen.

The slowdown of foreign economies and worsening of relations with China have reduced exports and production, making domestic business more sluggish.


Prompt decision praiseworthy

The Bank of Japan was correct in promptly deciding on additional monetary easing measures to follow up those decided in September and October.

The 225-issue Nikkei Stock Average has surged back to the 10,000 yen level due to high expectations for the incoming administration led by Abe, who is aggressive about pump-priming measures.

Of course, monetary policy alone is not enough to defeat deflation and achieve an economic recovery. The key is for the government and the central bank to conclude pragmatic policy accords.

We hope they will coordinate their efforts expeditiously after the launch of the new government.

It will be necessary to restore a process that allows funds made available as a result of monetary easing to be used as loans for plant and equipment investments to expand both corporate profits and jobs.

The government is primarily responsible for undertaking this task. First and foremost, it will be essential to resolve as soon as possible the shortage in demand, which is one cause of deflation.


Big stimulus package vital

Immediate results can be expected from the implementation of such urgent public works projects as repairs to aging infrastructure and improvement of antidisaster capabilities. It is indispensable to carry out a large-scale economic stimulus package after compiling a supplementary budget.

Issuing a certain amount of additional government bonds will be unavoidable to secure fiscal resources but this should be done without causing the fiscal balance to deteriorate further.

In formulating the budget for fiscal 2013 starting in April, it will be imperative to significantly cut back on spending programs initiated under the handout policies of the Democratic Party of Japan-led administration.

It also will be essential to expand measures to assist corporate activities, including tax breaks for investment in growth fields, lowering the corporate tax and reviewing regulations detrimental to start-up businesses.

To keep the Bank of Japan on the defensive, the LDP and others have threatened to revise the Bank of Japan Law and hints have been dropped in connection with the bank's next governor.

However, if the bank's independence is undermined, it may lower confidence in Japan's monetary system and government bonds and spread disarray throughout the financial markets. Excessive political pressure must be avoided.

(From The Yomiuri Shimbun, Dec. 21, 2012)
(2012年12月21日01時29分  読売新聞)

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