Prime minister election front-runner Shinzo Abe already has plans for turning Japan into a military power, and now the country’s largest business lobby, Keidanren, says his strategy for the Bank of Japan will tank the nation’s already weak economy. The lobby feels that Abe’s calling on the central bank for unlimited easing is “reckless,” along with the plan to make the BOJ participate in his bond-buying scheme, in other words trying to create inflation by printing money.
Japan has been in a state of deflation for years, resulting in consumers holding on spending when they know prices will be cheaper in the near future, thus decreasing demand and investment. Hiromasa Yonekura, the Keidanren chairman, has joined the criticism of the Abe’s strategy, stating that forcing the BOJ to buy government bonds will only cause the international community to question the institution’s credibility. This kind of harsh outlook is rare coming from the Keidanren, as Abe’s business-friendly Liberal Democratic Party (LDP) has long been an ally.
Yonekura added that recent weakening of the yen is a result of the BOJ’s additional monetary easing, not Abe’s comments about an aggressive monetary policy should be elected. Further, BOJ chief Masaaki Shirakawa has also brushed aside Abe’s strategy for fixing the economy, warning that the bank will remain independence. Abe is now seen as backtracking, using his Facebook in an effort to clarify that the Bank of Japan shouldn’t directly purchase government bonds, but rather purchase through operations in the market.
[via Business Times]
Comments Off on JDP Startup Corner: Pros & Cons of Working with a Partner in Japan