BOJ not doing enough on deflation

The Bank of Japan is not doing enough to fight deflation and one possibility is for the central bank to buy more government bonds, a campaign aide to a ruling party powerbroker challenging Prime Minister Naoto Kan said.

But lower house lawmaker Banri Kaieda, an aide to Ichiro Ozawa, also said that the BOJ alone could not rescue Japan from deflation and that the central bank’s remaining policy options were limited.

Ozawa is challenging Kan in a Democratic Party of Japan (DPJ) leadership election on September 14 but the outcome is too close to call. The winner will likely be prime minister by virtue of the party’s majority in the powerful lower house.

“It is not enough,” Kaieda told reporters in an interview on Monday when asked if the BOJ was taking sufficient action against deflation.

“But it’s clear that this issue will not be resolved with just the BOJ’s policies alone,” said Kaieda, who is part of a group of lawmakers advising Ozawa on policies.