BOJ holds fire, defies easing calls

The BOJ set a 1 percent inflation target in February and has eased policy four times so far this year. Abe has talked of setting an inflation target of 2 percent or 3 percent.

Despite the political pressure, the BOJ is caught in a dilemma. Bank notes in circulation are rising and the balance of deposits that commercial banks park with the BOJ is at a record high of 44 trillion yen as a result of its ultra-loose policy.

But bank lending rose a meagre 0.9 percent in the year to October, a sign the extra cash has not prompted companies and households to borrow more for new spending.

Under the current law, the BOJ is free to set monetary policy. But the government nominates the governor, deputy governors and board members, subject to parliament approval, giving it power to sway the direction of policy. Shirakawa's five-year term ends in April and both his deputies retire in March, giving the new government a chance to select who fills the top posts.

Government pressure has frequently driven the central bank into easing policy, particularly when a rise in the yen raised calls for measures to ease the impact of the stronger currency on the export-reliant economy.

While Abe's remarks have helped lift Tokyo share prices on expectations of bolder monetary stimulus, some analysts say his demands are unrealistic and they doubt whether he will stick to them once in power.

Many economists also warn that threatening central bank independence

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