TOKYO, Feb 12: Japan wants its central bank to raise monthly purchases of Japanese government bonds (JGBs) by 25 per cent to help fight deflation in the country, Finance Minister Masajuro Shiokawa said on Tuesday.

A second minister called on the Bank of Japan (BoJ) to take bold and flexible action when considering fresh monetary policy to help the Japanese economy out of its worst post-war recession.

We know the BoJ’s efforts to provide ample liquidity helps to prevent deflation, Shiokawa said.

The government wants the bank to increase its outright purchases of government bonds to one trillion yen from 800 billion yen, he told a budget committee meeting in parliament.

Deflation has attacked the Japanese economy since the mid-1990s, eating into corporate profits and raising the burden of debt in real terms.

Slack demand amid a deep recession coupled with cheap imports has ensured prices have continued to weaken, forcing firms to slash payrolls in a bid to survive the slump. This has further pressured consumer spending, prompting further price cuts in a vicious cycle.

In December, consumer prices fell for the 28th straight month, down 1.2 per cent from a year earlier.

The government is considering several measures to prevent deflation, including necessary bold and flexible action by the BoJ to further ease monetary policy and to regulate excess margin selling in the stockmarket, State Minister for Economic and Fiscal Policy Heizo Takenaka told parliament.

But central bank governor Masaru Hayami denied he had received direct instructions from the government on how to tackle the nationwide price slide.—AFP