By Leika Kihara
TOKYO (Reuters) -The Bank of Japan should focus on working with the government to boost domestic demand and revitalise the economy, Souhei Kamiya, head of the small opposition party Sanseito, said on Thursday, criticising the central bank’s quantitative tightening plan.
“I understand that Japan shouldn’t issue an unlimited amount of government bonds.
But Japan’s economy is still not on a strong footing,” Kamiya said in a press conference.
“If the BOJ reduces the amount of bonds it accepts now, that could make it harder for Japan to issue debt and strongly constrain Japan’s economic policy.
That’s my concern,” he said.
The remarks highlight the political challenges the BOJ could face in raising interest rates and continuing with a slow but steady tapering of its bond purchases.
Founded in 2020, Sanseito is a small populist party known for its call to bring back the practice of concubines for the emperor.
It has just five seats in parliament, but its public support has risen ahead of the July 20 upper house election drawing attention as a party that could influence the ruling coalition’s policies depending on the outcome of the election.
In a poll conducted by the Yomiuri newspaper on June 27-29, Sanseito was the third most popular party after the ruling Liberal Democratic Party and the largest opposition Constitutional Democratic Party of Japan.
Kamiya said the party’s economic policy centres on tax cuts and aggressive government investment to end three decades of economic stagnation.
“The Ministry of Finance and BOJ should work hand in hand in taking aggressive steps for a few years to boost domestic demand,” Kamiya said.
“Our request is for the BOJ to prioritise supporting policy to boost domestic demand,” which would then lead to increased tax revenues and diminish the need to issue bonds, he said.
(Reporting by Leika Kihara; Editing by Alex Richardson and Kate Mayberry)
