BOJ chief to continue monetary stimulus

Bank of Japan governor Masaaki Shirakawa has pledged to continue to add monetary stimulus even as politicians called on the central bank to do more to end deflation.

The BOJ would pursue easing to help overcome deflation and put the economy on a sustainable growth path, Shirakawa said at a branch manager meeting in Tokyo today. Stimulus measures announced 14 February led to a weak yen, which helped exporters.

According to ruling party lawmaker Tsutomu Okubo the yen would weaken more effectively on further stimulus by the BOJ, an indication politicians would continue to press the central bank to expand its asset purchases. The BOJ held back from easing policy at the meeting on 10 April, which led to calls from Democratic Party of Japan (DPJ) lawmakers including Takeshi Miyazaki for them to take ''bold and large-scale'' action later this month.

According to Okubo, a DPJ lawmaker, who spoke in interview in Tokyo yesterday, it was obvious that the central bank's policies had more influence over the currency than intervention, citing the yen's depreciation of over 4 per cent against the dollar since the BOJ's February decision.

Meanwhile, the upper house of the Diet rejected Ryutaro Kono's nomination to the BOJ board with some lawmakers saying, the BNP Paribas SA economist was not sufficiently committed to easing.

He said yesterday that large purchases of bonds by the BOJ could potentially affect financial stability. He had strong reservations over the increasing number of people who wanted to revise the BOJ law, as central bank independence prevented ''the lure of monetization,'' Kono told  a BNP Paribas event in Tokyo.