Koizumi pressures BoJ to maintain policy

Nov 14 | Updated: Nov 15 2005, 05:30am hrs
Japans Prime Minister Junichiro Koizumi said it is too early for the Bank of Japan to change its deflation fighting policy, putting pressure on the bank to keep flooding the economy with cash.

Bank of Japan Governor Toshihiko Fukui and policy makers forecast on Oct. 31 that a seven-year bout of falling prices will end in the year to March, increasing the chances the board will change its policy during the course of next fiscal year.

Its too early, for the central bank to shift its policy, Koizumi said in Tokyo. Were still in deflation while prices arent zero or above. Comments by Koizumi and ruling party members including Chief Cabinet Secretary Shinzo Abe today highlight the governments concern that a change to the central banks policy would prompt investors to dump bonds, raising yields and the cost of servicing the nations debt, which is projected to reach 151% of gross domestic product by March.

Japans five-year notes rose on Monday, pushing yields down the most in more than a year, after the Nihon Keizai newspaper reported that Hidenao Nakagawa, the ruling Liberal Democratic Partys policy chief, opposed a policy change, saying the bank has no independence in setting policy.