TOKYO -- The Japanese government and the market are increasing pressure on the Bank of Japan to further ease monetary policy to take the sting out of the consumption tax rise coming in April.
The levy will increase from 5% to 8%, raising concerns Japan's fragile recovery will come unglued. The central bank decided to stand pat at its two-day policy board meeting that ended Wednesday. The clamor for more easing is growing, however, with estimates that the consumption tax hike could reduce domestic demand by as much as 12 trillion yen ($114 billion) annually. The BOJ is being assailed from all sides and may feel it has no choice but to open the taps further in the spring. The government and market participants are already looking ahead to the specific steps the bank will take.