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Tuesday, 25th August 2009
In General Japan News,

BOJ 'could enjoy more independence' under the Democrats

The Democratic Party has been predicted to remove the ruling Liberal Democratic Party after the election on August 30th, which could mark a new era for the Bank of Japan (BOJ), it has been suggested.

Reuters has noted that the Democratic Party is perceived to encourage central bank independence more than the party currently in power, which could result in the yet-to-win opposition asking the BOJ to keep interest rates low to support economic recovery.

However, Katsuya Okada, the Democratic Party's second executive, said last month that he believed the government should not interfere with the monetary policy of the BOJ and would respect its decisions.

Speaking to the news resource, Hirokata Kusaba, a senior economist at Mizuho Research Institute, said: "I think the Democrats will take a more pragmatic approach to macroeconomics if they come to power."

Some investors have predicted that the interest rate will remain at 0.1 per cent until 2011 at least.

Masaaki Shirakawa, governor of the BOJ, said at the recent Symposium sponsored by the Federal Reserve Bank of Kansas City that the authorities need to adequately regulate and supervise individual financial institutions.

Written by Mark Smith