- Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.
The Cabinet of Prime Minister Yoshihiko Noda is likely to approve an 880 billion yen ($10.7 billion) emergency plan Friday in order to boost struggling economy. The amount of a new stimulus is more than double a 422 billion yen package approved by Noda's government in October. The money will be taken from reserve funds and will be mostly, aimed at boosting growth in a range of sectors, such as agriculture and health care, as well as on public works projects aimed at last year's tsunami disaster. Japanese central bank has already eased its monetary policy twice during the last two months by 21trillion yen in order to boost economic growth, so the world's third biggest economy will avoid the recession.
"The government is unable to add much fiscal stimulus because of budgetary constraints," said Takahiro Sekido, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the central bank. "So it will press the BOJ for more easing."
"The BOJ would likely come under increasing pressure," Chotaro Morita, chief strategist for fixed income at Barclays Plc in Tokyo, said before today's decision. "The December monetary policy meeting is scheduled to take place after the presumed election date, suggesting pressure for additional easing could exert an influence at an early stage."
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