Kubo Sees Boj Keeping Easy Money Stance

Kubo, speaking to reporters on his way to Washington to attend the annual G7 meeting of central bankers and finance ministers, said that the Bank of Japan governor had been saying that the central bank's monetary policy would be geared to put the economy on a sure recovery track.

Although I cannot comment on what the BoJ would do about its monetary policy, I think the central bank is managing its policy based on what the Governor has been saying, he said.

Kubo reiterated his view that the economy was heading toward a sustainable recovery based on private demand, although the pace is still gradual.

He said that Japan will have enough public works spending left to support its economy even if it does not come up with a supplementary budget.

He said that he would also like to tell the other G7 nations of Japan's urgent need for fiscal consolidation.

Since a planned consumption tax hike to five percent from April 1997 from the current three percent is going to be made to make up for previous tax cuts, the finance minister explained that the hike will be implemented as planned.

There is no change in this decision.

On special income tax cuts which were introduced to prop up Japan's economy, Kubo said that the decision on whether to keep this has yet to be made.

Kubo will talk with US Treasury Secretary Robert Rubin on Saturday morning for about 30 minutes.

He said he expects Rubin will urge Japan to pursue policies to promote Japan's economic growth.

He did not elaborate further.

Kubo said that he planned to meet acting US Trade Representative Charlene Barshefsky for dinner on Sunday to discuss US access to the Japanese insurance market.

I hope the US side will be as flexible as it can be (in these talks), he said.

He added that that Japan would also make efforts for early settlement of the dispute.

Sources close to the Minister of Finance said Barshefsky and Kubo would likely talk about conditions for Japanese insurance subsidiaries which will start operating in the third sector niche market from October 1.