The new Japanese Cabinet and the Bank of Japan appeared closer Monday to setting a 2 percent inflation target to lift Japan's out of its persistent deflation.Akira Amari, economic and fiscal policy minister in the Cabinet of Prime Minister Shinzo Abe, said the government and the country's central bank were near an agreement to include the doubling of the inflation target in their policy coordination efforts, expected to be released after the bank's policy meeting Monday and Tuesday, Kyodo News reported.
Speaking on NHK television channel, Amari said the agreement will likely be a joint declaration or joint statement, the report said.
"The government and the BOJ will be able to share things that they have not been able to until now," Amari said.
Abe, who returned as prime minister after his Liberal Democratic Party won a landslide victory in parliamentary elections in December, has made it his main task to end the chronic decade-long deflation that has again pushed Japan's economy into a mild recession. Japan's economy, the third-largest in the world after that of the United States and China, also has been hit by falling exports and weak domestic demand since the devastating earthquake and tsunami in March 2011.
One analyst told Kyodo the central bank should immediately take such steps to help Abe accomplish his anti-deflationary goal before the planned sales tax hikes begin to take effect next year.
The concern among some experts is that monetary easing such as raising the inflation target could push food and energy costs higher for the common people.
The Yomiuri Shimbun, quoting sources, reported after setting a clear inflation target, the BOJ will go ahead with monetary easing while the Abe government looks for ways to raise economic growth.