Bank of Japan minutes show the government pressing for “visible results” from efforts to end decade-long deflation that is weighing on the nation’s recovery from last year’s earthquake and economic contraction.

The BOJ should “conduct monetary policy flexibly and decisively” a Cabinet Office representative said at a April 9-10 policy meeting, according to a record of the gathering released in Tokyo Monday. It’s “particularly important” to promptly achieve a central bank goal of 1 percent inflation, the official said.

A strengthening yen may add pressure for Bank of Japan Governor Masaaki Shirakawa and his policy board to add to easing after expanding their asset-purchase program by 10 trillion yen ($125 billion) on April 27. The currency traded at 79.84 per dollar as of 11:01 a.m. in Tokyo, up more than 4 percent since mid-March.

“The BOJ can’t relax even after loosening policies last month, especially given that the yen is appreciating,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo and a former central bank official. “political pressure for more easing will remain high.”

The BOJ kept the benchmark overnight lending rate unchanged between zero and 0.1 percent and kept the size of its credit and asset-purchase program unchanged at the April 9-10 meeting. Officials from the Cabinet Office and Finance Ministry attend the meetings as observers and do not have voting rights.

Finance Ministry officials at the gathering reiterated the need for the government and central bank to continue working toward overcoming deflation, according to the minutes. 

(Bloomberg)