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Japan must not rely solely on BOJ to revive economy: finance minister

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Japan's government must not rely solely on the Bank of Japan to boost economic growth and defeat deflation, following the central bank's decision to reboot its monetary policy framework, Finance Minister Taro Aso said on Friday.

[TOKYO] Japan's government must not rely solely on the Bank of Japan to boost economic growth and defeat deflation, following the central bank's decision to reboot its monetary policy framework, Finance Minister Taro Aso said on Friday.

The BOJ on Wednesday shifted to targeting interest rates on Japanese government bonds as the focus of its massive monetary easing programme, dropping its explicit target of increasing base money.

"I understand that this was adopted as a necessary step to achieve the 2 per cent inflation target as quickly as possible based on a joint statement between the government and the BOJ," Mr Aso told reporters after a cabinet meeting.

Mr Aso said the government must tackle structural reform and carry out its plans to spur the economy. The BOJ's new framework won't have an immediate impact on government bond markets, he added.

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"The government and the BOJ share the policy task to end deflationary stagnation and achieve sustainable economic growth. We don't intend to ask only the BOJ to resolve."

Mr Aso said the government aims to have parliament swiftly enact a supplementary budget to fund part of the 28-trillion-yen (S$375 billion) economic stimulus package when its extraordinary session is convened on Sept 26.

On the structural policy front, Mr Aso said the government would tackle head on issues such as labour reform.

Economy Minister Nobuteru Ishihara reiterated Prime Minister Shinzo Abe's resolve to use all policy tools - monetary, fiscal and structural policies - to shift the world's third-largest economy into high gear.

"Abe has said we need to use all tools available both for fiscal policy and monetary policy and that we need to accelerate our efforts," Mr Ishihara said at a separate news conference.

"We've already compiled a stimulus package. We must ensure this stimulates domestic demand."

REUTERS

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