Economic minister Heizo Takenaka said Thursday he will urge Bank of Japan policymakers to further ease monetary policy to pave the way for a weaker yen and bad-loan disposal.
"I will attend (a two-day meeting starting Monday) and will say what I have been saying till now," the state minister in charge of economic and fiscal policy said.
In a meeting with lawmakers of the Liberal Democratic Party, Takenaka stressed the adoption of monetary steps to stem the deflationary spiral and aide banks in their disposal of bad loans; he also expressed hope that this would lead to a weaker yen.
A weak yen is a boon to Japan's export juggernaut and would put upward pressure on domestic prices.
"It is impossible (for private banks) to proceed with the disposal of bad loans amid deflation," Takenaka opined. "Monetary policy is essential for prices to rise."
If the BOJ takes further steps, "it would probably result in a weaker yen," he continued. "The yen has to be quite weak for prices to rise."
His comments underscore the government's latest stance. Finance Minister Masajuro Shiokawa said earlier this week that he would tolerate a gradual depreciation of the yen resulting from monetary easing.
Takenaka said he will keep pressuring the central bank. "There is no guarantee of success (in stemming deflation), but there are no other steps to take, so all possible policy measures should be implemented."
BOJ Gov. Masaru Hayami has repeatedly expressed his reluctance to adopt further easing, arguing that although the central bank has provided ample liquidity, it has not boosted bank lending and that the government should instead accelerate economic structural reform.