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TOKYO : Japan's Finance Minister Yoshihiko Noda has defended the Bank of Japan (BOJ) from criticism over its latest policy step.
Speaking at a news briefing on Tuesday, he said the BOJ acted properly and quickly, in response to recent changes in the financial and economic conditions.
On Monday, the BOJ eased its monetary policy, by extending low interest rate loans to banks.
On its part, the Cabinet endorsed the framework of a stimulus package outlined on Monday to help prop up the economy.
Under the stimulus package, Prime Minister Naoto Kan said job creation is of key importance.
The measures include incentives to boost the hiring of high school and university graduates.
And to boost consumption, the government plans to expand government incentives for the purchase of eco-friendly products and homes.
It will also provide support for companies investing in green technology.
The stimulus package worth 920 billion yen (US$11 billion) uses funds from reserves from the fiscal 2010 budget.
Masamichi Adachi, a senior economist at JPMorgan Securities Japan said: "It's probably too small compared to what's happening now in the global economy, because this downturn facing Japan's economy is not only from Japan's domestic side but more from the external side.
"So I think it's difficult for any government, especially the Japanese government, to counter this downturn."
Amid persistent concerns over the outlook, the Nikkei fell into the red in Tuesday's trade, while the yen continued to strengthen against the US dollar.
This is despite data out Tuesday showing that industrial output came in better than expected for July - rising by a seasonally adjusted 0.3 per cent from the previous month.
The Kan government also faces another headache. Various ministries and agencies have made a bigger-than-expected request for fiscal year 2011 budget. It has reached the biggest ever of 96 trillion yen. And this comes after the Kan government requested each ministry to cut expenditure by 10 per cent.
Adachi said: "It's bureaucratic work. They really want to have more power, that means they want more budget.
“It's not bad intentions because they want to support the economy, they want to support the life of the people. So they want to do more. But as you know Japanese government's (debt) is significant, we have to reduce it.”
Meanwhile, the outlook on the government's economic measures is also becoming uncertain as political heavyweight Ichiro Ozawa has confirmed that he would challenge PM Kan for the ruling party's top post. - CNA /ls
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