Plans by Japan’s prime ministerial front-runner to force the central bank to buy government bonds have been criticised as “reckless” by the head of a major business lobby.
Opposition leader Shinzo Abe called for “unlimited” central bank easing and told supporters earlier this month he would make the Bank of Japan participate in his bond-buying scheme – effectively printing money to generate inflation.
Japan has been mired in deflation for years, a situation that discourages consumers from spending in the knowledge that products will be cheaper in the future, sapping demand and dissuading firms from investing.
But the plan has been criticised from all quarters and on Monday, Hiromasa Yonekura, the chairman of Keidanren (Japan Business Federation), a habitual ally of Abe’s Liberal Democratic Party, joined the chorus.
“It’s reckless rather than bold,” he said, according to media reports Tuesday.
To force the central bank to buy government bonds “could create a problem with the international credibility” of Japanese government bonds, Yonekura told reporters in a rare criticism against the leader of the business-friendly LDP.
“I don’t think the market is moving because of President Abe’s comments,” Yonekura continued, referring to the recent depreciation of the yen which has been attributed to market expectations that Abe would press for aggressive monetary policy as prime minister.