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UNCLAS SECTION 01 OF 10 TOKYO 002289 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 05/22/07-1 
 
 
INDEX: 
 
(1) Ruling and opposition parties gearing up for Upper House 
election, which is two months away 
 
(2) 43 lawmakers form parliamentary league to support Prime Minister 
Abe's foreign policy based on values 
 
(3) Convention of special postmasters' association: Trying to repair 
relations with LDP 
 
(4) Government to create regional corporate revitalization body next 
spring 
 
(5) Panelists project 2% economic growth in FY2007, given brisk 
internal, external demand 
 
ARTICLES: 
 
(1) Ruling and opposition parties gearing up for Upper House 
election, which is two months away 
 
YOMIURI (Page 3) (Abridged) 
May 22, 2007 
 
With this summer's House of Councillors election expected to take 
place on July 22, just two months away, political parties are making 
final efforts to determine their candidates. The results of the 
upcoming election are directly linked to the fate of the Abe 
administration. Given the situation, both the ruling and opposition 
camps are gearing up efforts to win a majority in the Upper House. 
 
Ruling camp to put Abe forward to win support 
 
Liberal Democratic Party Election Strategy Headquarters General 
Affairs Director Yoshio Yatsu ordered yesterday 15 Lower House 
lawmakers and their secretaries to strengthen their support for the 
LDP candidates running in eight single-seat districts that are also 
their home turfs. Yatsu's instruction followed an independent LDP 
opinion survey, which had shown close contests in eight prefectures: 
Yamagata, Yamanashi, Shiga, Nara, Kagawa, Tokushima, Ehime, and 
Kochi. Yatsu's list of "personal advice" also included Chief Cabinet 
Secretary Yasuhisa Shiozaki from Ehime. 
 
SIPDIS 
 
The ruling bloc aims to win 64 seats, including those not up for 
grabs, in order to maintain a majority in the Upper House. If the 
New Komeito were to keep 13 seats, the LDP would have to win only 51 
seats. Yatsu's target is to win 20 single-seat districts out of 29 
districts, one seat each in multiple-seats districts out of 18, and 
18 proportional representation seats. 
 
The LDP has decided to field a total of 48 individuals for the 
electoral districts. Before long, the party will endorse former 
TV-Asahi announcer Tamayo Marukawa as its second candidate for the 
Tokyo electoral district. The party is likely to replace only one 
candidate, former Justice Minister Takao Jinnai, who has declined 
LDP endorsement. 
 
The LDP has also endorsed 33 individuals for the proportional 
representation segment. The party's endorsement is expected to 
finish with additional one or two persons, including Advisor to the 
Prime Minister on the Abduction Issue Kyoko Nakayama, in compliance 
with Abe's wishes. 
 
TOKYO 00002289  002 OF 010 
 
 
 
The New Komeito has picked five individuals for mostly large cities, 
such as Tokyo and Osaka. The party aims at getting all eight 
proportional-representation candidates elected. 
 
The ruling bloc's basic strategy is to use a "barter cooperative 
system" in which the New Komeito supports LDP candidates in 
districts devoid of its own candidates and the LDP shifts its 
representation ballots to the New Komeito in return. The LDP has 
also decided to put former Lower House lawmaker Seiichi Eto on its 
proportional representation list in accordance with Abe's wishes. 
The New Komeito is considering fielding Kyoko Nakayama, the wife of 
Lower House member Nariaki Yamanaka, a native of Miyazaki. 
 
The ruling coalition plans to put forward Prime Minister Abe, whose 
support ratings are bouncing back. Abe plans to pick up trashes with 
children at the foot of Mr. Fuji during his stumping tour in 
Yamanashi. He apparently intends to expand the LDP support base by 
blurring his hawkish image and playing up his consciousness about 
environmental issues. 
 
Opposition camp aims to force ruling bloc into a minority 
 
"Winning additional several seats would not be a true victory. We 
must win a majority in order to put an end to LDP-New Komeito 
politics," declared Minshuto (Democratic Party of Japan) President 
Ichiro Ozawa in a pep rally held in Niigata City on May 20. 
 
The largest opposition party, which will put 32 seats up for 
election, has decided to field 48 individuals in 41 prefectures 
excluding Fukushima, Ishikawa, Shimane, Oita, Miyazaki, and Okinawa. 
The party has also decided not to field anyone in Oita in deference 
to the Social Democratic Party but plans to determine its candidates 
for the remaining six prefectures before the end of the month. 
 
Ozawa eyes winning 15 single-seat constituencies. To win 
single-seats, the party has many rural area-oriented plans, 
including one to distribute flyers showcasing an income compensation 
plan to pay the differences between production costs and market 
prices to farmers. 
 
The party has picked 33 proportional representation candidates, 
including eight individuals affiliated with Rengo (Japanese Trade 
Union Confederation), a former professional baseball player, and a 
former president of the Junior Chamber International. 
 
The Japanese Communist Party has officially picked 46 candidates for 
46 prefectures excluding Fukui. The party eyes five representation 
seats. The SDP has determined candidates for 12 prefectures and six 
representation candidates, including a former Tachikawa mayor. The 
People's New Party will field its own candidates in four 
prefectures, back Minshuto candidates in 18 prefectures, and field 
12 proportional representation candidates. 
 
Forcing the ruling bloc into a minority is the opposition parties' 
common goal. The opposition parties are required to join forces in 
the election while playing up their unique features at the same 
time. 
 
In the May 16 meeting of SDP bloc chiefs and election committee 
executives, election chief Sadao Fuchigami underlined the importance 
of the party's unique policies, citing the results of the recent 
nationwide local elections. Secretary General Seiji Mataichi also 
 
TOKYO 00002289  003 OF 010 
 
 
said: "We will not automatically back Minshuto candidates just 
because don't have our own candidates." 
 
Opposition parties speculate that the People's New Party might cause 
discord in the opposition camp after the election. The Minshuto and 
SDP have determined their unified candidate for Toyama, PNP leader 
Tamisuke Watanuki's home turf, but the PNP has yet to decide on its 
response. "The PNP might be comparing the ruling camp with the 
opposition bloc with an eye on the post-election period," a Minshuto 
lawmaker said. 
 
Public evaluation of Abe administration in focus 
 
The upcoming Upper House election will provide the public with the 
first opportunity to evaluate the Abe administration since its 
inauguration last September. 
 
The ruling bloc identifies the election as an occasion for the 
public to judge the administration's achievements, such as 
educational and civil service reforms. The ruling camp also intends 
to play up Abe's agenda items, such as constitutional amendment. 
 
Meanwhile, the opposition bloc plans to focus on the question of 
socioeconomic disparities. Public evaluation of the Abe 
administration will undoubtedly affect the results of the upcoming 
election. 
 
(2) 43 lawmakers form parliamentary league to support Prime Minister 
Abe's foreign policy based on values 
 
ASAHI (Page 4) (Full) 
May 18, 2007 
 
A total of 43 junior and mid-level lawmakers belonging to the ruling 
Liberal Democratic Party (LDP) formed on May 17 a parliamentary 
league to promote Prime Minister Shinzo Abe's foreign policy focused 
on values. Most of the 43 Diet members include those who worked 
together with him regarding the history school textbook issue. Keiji 
Furuya heads the group and LDP Policy Research Council Chairman 
Shoichi Nakagawa assumed an advisor post. Most members share Abe's 
principles. The group members hail from various LDP factions. It 
appears to be an Abe faction. 
 
The first meeting of the group on May 17 started with Chairman 
Furuya's speech seeking to constrain China: 
 
"Prime Minister Abe held a Japan-China summit soon after assuming 
office. But we cannot dispel doubts about China's act of hegemony, 
including its huge military spending. So China does not share the 
same common values with Japan." 
 
Nakagawa also expressed a sense of alarm toward China. While calling 
China Japan's important neighbor, he stated: "We must avoid Japan 
from becoming one of China's provinces." 
 
Abe visited China and South Korea immediately after he took office 
in an attempt to repair relations between the two countries that 
went sour under the government of Prime Minister Junichiro Koizumi. 
However, in his policy speech delivered in January, Abe mentioned 
Indonesia and Australia as countries with which Japan shared the 
same values. The primary aim of the parliamentary group is 
supporting Abe's diplomatic values. 
 
 
TOKYO 00002289  004 OF 010 
 
 
Furuya once bolted the LDP after voting against the government's 
postal-privatization bill but he rejoined late last year. He opposes 
a review of Article 772 of the Civil Law that states that a baby 
born to a woman within 300 days of her divorce is presumed to be the 
ex-husband's offspring. He has been actively working as a core 
member of the conservative lawmakers. 
 
Citing in his speech on the 17th a human rights protection bill, a 
bill revising the Imperial House Law, the newly enacted National 
Referendum Law, and Article 772 of the Civil Law, Furuya stressed: 
"All directly link to the issues of thought and creed, political 
philosophy and principles. I want to rally likeminded persons and 
take action through this group." 
 
All the more because many group members worked together with Abe 
regarding such issues as the history textbook and abduction issues, 
the new parliamentary group may play the main role of embodying the 
conservative policy in the LDP. 
 
Six former postal rebels 
 
Furuya told members of the parliamentary group: "Basically I share 
many principles with the prime minister." 
 
Furuya, Nakagawa and Deputy Chief Cabinet Secretary Hakubun 
Shimomura were also members of the "group of junior lawmakers to 
think of Japan's future and historical education." Abe served as 
chief of the secretariat for the group. Abe and Furuya have known 
each other a long time since the two are graduates of the Seikei 
University. They have similar principles. Some in the LDP say that 
Abe decided to reinstate the postal rebels because he wanted to have 
fellow group members like Furuya rejoin the party. Of the 43 members 
of the pro-Abe group, six were reinstated members. 
 
Eriko Yamatani, a special advisor to the prime minister, conducted 
activities criticizing sex education. Tomomi Inada and Kyoko 
Nishikawa raised an objection to a review of 772 Article. Members of 
the new parliamentary group seem to be more conservative than the 
"parliamentary league to support a second chance," which backed Abe 
in the last fall's LDP presidential race. 
 
Regardless of their "principles," members of the Machimura and Ibuki 
factions are participating in the group. In contrast, lawmakers from 
the Koga, Tanigaki and Nikai factions are main members of the 
parliamentary league to place priority on Asia. 
 
Members of the parliamentary league to support Abe's foreign policy 
base on values 
 
Machimura faction: Hakubun Shimomura; Shinsuke Okuno; Ichiro 
MiyashitaYasuhide Nakayama; Koichi Hagiuda; Masaaki AkachiTomomi 
Inada; Shuichi Takatori; Yuichi Ogawa;Tsukasa Kobiki; Naoki Okada; 
Eriko Yamatani; Nobuo Kishi 
 
Tsushima faction: 
 
SIPDIS 
Hiroshi Imazu; Toru Toida; Tatsuharu MawatariAtsushi Watabe 
 
Koga faction: 
Seiji Kihara; Jun Hayashi 
 
Ibuki faction: 
Shoichi Nakagawa; Toshio Ogawa; Kyoko NishikawaKenta Matsunami; 
Chubei Kagita; Yohei MatsumotoYoshio Nakagawa; Tsukasa Akimoto 
 
TOKYO 00002289  005 OF 010 
 
 
 
Komura faction: 
Tokuhiko Akagi; Katsuko Nishimoto 
 
Tanigaki faction: 
Yasuhiro Ozato 
 
Aso faction: 
Takeshi Iwaya; Keisuke Suzuki 
 
Lawmakers with no factional allegiance: 
Kenji Furuya; Masahiro Imamura; Kenichi Mizuno; Taku Eto; Ryota 
Takeda; Hiroshi Moriya; Sadahisa Furukawa; Minoru Kihara; Yoji Muto 
 
(3) Convention of special postmasters' association: Trying to repair 
relations with LDP 
 
SANKEI (Page 2) (Full) 
May 21, 2007 
 
The National Association of Special Postmasters (Zentoku) composed 
of about 18,900 special postmasters across the nation held an annual 
convention on May 20 in the city of Hiroshima. The association once 
invited Liberal Democratic Party (LDP) lawmakers connected to postal 
interests (yusei-zoku) as guests to their conventions. Last year's 
convention, which took place after postal-privatization had been 
decided, was a politically-charged event, With many anti-postal 
privatization lawmakers participating. No political party leaders 
were invited to this year's convention. The decision is viewed as a 
signal to starting a move to repair ties with the LDP. 
 
In his speech delivered as a guest, Internal Affairs and 
Communications Minister Yoshihide Suga expressed consideration to 
Zentoku, saying: 
 
"Without your cooperation, postal privatization will not be 
successful. I would like to lay the groundwork for privatizing Japan 
Post so that you will be able to provide postal services with 
confidence." 
 
Suga and House of Councillors member Kensei Hasegawa of the People's 
New Party were the only two politicians who were invited to this 
year's convention. 
 
Following Suga and Japan Post President Yoshifumi Nishikawa, 
Hasegawa delivered a speech as an advisor to Zentoku, in which he 
stopped short of saying: "It was good that we were able to hear 
positive views from government and business leaders (Suga and 
Nishikawa). Legal change will be needed." 
 
Anti-postal-privatization lawmakers  -- including People's New Party 
President Tamisuke Watanuki, who bolted the LDP after voting against 
the postal-privatization legislation, and Hosei Norota, an 
independent and former agriculture minister -- assembled in last 
year's convention in Aomori, raising voices, "Let's make the 
government review the Postal Privatization Law!" 
 
One of the reasons for a change in the mood is probably that former 
postal rebels reinstated in the LDP "had Japan Post accept requests 
from special postmasters," said a source familiar with Zentoku. 
 
Nishikawa, who became Japan Post president in April, announced a 
review of the existing policy, as well as a policy of utilizing 
 
TOKYO 00002289  006 OF 010 
 
 
Zentoku's liaison conference to promote operations, which controls 
special post offices. 
 
Therefore, there reportedly is growing concern in Zentoku, mainly 
among mid-level members, that rather than relying only on the 
People's New Party, the association needs to work on the ruling LDP 
as a pragmatic response. The rumor is that the People's New Party 
and the LDP may join hands depending on the result of the July Upper 
House election. So, Zentoku appears to have determined that it 
should weaken ties with only that political party. 
 
Referring to the fact that he was not invited to the convention in a 
press conference on May 16, Watanuki stated: "With the Upper House 
election drawing closer, the spirit of the convention is not that 
political events dominate the convention." 
 
Taiju-kai, a political organization composed of retired special 
postmasters, has decided that its regional organizations will 
support People's New Party's candidates on their own decision. Taiju 
took a position that there would be no change in cooperation with 
the People's New Party. 
 
There is a view that since Taiju has not fielded any its candidates, 
it has probably not tried to secure votes. 
 
One of the senor Taiju members in the eastern Japan said: 
 
"Since we owe something to the People's New Party, which opposed 
postal-privatization, we will support the party in the upcoming 
election. We don't know what will happen after the July election." 
 
(4) Government to create regional corporate revitalization body next 
spring 
 
NIHON KEIZAI (Top Play) (Full) 
May 19, 2007 
 
The government decided yesterday to establish next spring a regional 
industrial revitalization corporation (tentative name) tasked with 
assisting the business rehabilitation of local smaller companies. 
This will be a regional version of the Industrial Revitalization 
Corporation of Japan (IRCJ), which was disbanded this March. Under 
the government's plan, the Deposit Insurance Corp. of Japan will 
provide all the capital and extend government guarantees on procured 
funds. The new body will also help troubled firms revitalize their 
business by taking stakes in them, buying loans, and dispatching 
personnel. Additionally, they will handle the liquidation of failed 
joint ventures of local government and business (third sector). The 
government is hoping to spotlight the regional IRCJ as a centerpiece 
in a package of its regional revitalization measures, but there are 
still many tasks to clear, such as how to select companies eligible 
for revitalization assistance and how to maintain management 
discipline. 
 
The Cabinet Office crafted this plan based on Prime Minister Shinzo 
Abe's call for boosting the growth potential of regional economies. 
Private-sector members of the Council on Economic and Fiscal Policy, 
chaired by Prime Minister Abe, including Nippon Keidanren (Japan 
Business Federation) Chairman Fujio Mitarai, will announce the plan 
in a meeting on May 25. The framework will be incorporated in the 
government's economic and fiscal policy guidelines for 2007 due out 
in June, with the aim of submitting related legislation to an 
extraordinary Diet session in the fall. 
 
TOKYO 00002289  007 OF 010 
 
 
 
The new entity, a joint-stock company fully financed by the Deposit 
Insurance Corp. of Japan, will be capitalized at 50 billion yen, 
with 50 billion yen set as an aid threshold. The period of 
establishment will be five years, the same time limit imposed on the 
IRCJ. 
 
The staff of about 100 will be recruited from former IRCJ members 
and other experts on corporate rehabilitation. 
 
Adopting almost the same rehabilitation process as that of the IRCJ, 
the regional body will assess the assets held by troubled companies 
in response to their applications for assistance. An expert panel 
will judge whether to provide aid. 
 
The rehabilitation entity will dispatch private-sector 
rehabilitation specialists to the selected companies. It will also 
purchase stakes in the companies and loans. The regional IRCJ will 
offer assistance in cooperation with regional rehabilitation funds 
backed by local finance institutions, and if it deems it necessary, 
the new body will seek debt waivers. 
 
The regional IRCJ will also be tasked with handling the disposal of 
failed joint ventures of local government and business. With huge 
amounts of equity investment and loans poured into the so-called 
third sector by local governments, regional financial institutions, 
and government-affiliated financial institutions, coordinating 
conflicting interests is difficult. As a result, the liquidation 
process has been delayed in many cases. The new body will be 
responsible for coordinating such efforts, charging commissions to 
the relevant local governments. 
 
The former IRCJ helped reconstructing Kanebo and Daiei by utilizing 
the know-how of private-sector specialists. The regional version 
aims to make use of such success cases for regional revitalization, 
but there are many tasks that must be cleared away. It is important 
to establish a fair mechanism in selecting companies eligible for 
assistance and free from any improper political intervention. An 
increasing number of private-sector rehabilitation funds have 
already been established. In order to prevent the regional IRCJ from 
pressuring private-sector businesses and taking measures to survive 
unnecessary firms, management discipline is required. 
 
(5) Panelists project 2% economic growth in FY2007, given brisk 
internal, external demand 
 
NIHON KEIZAI (Page 3) (Slightly abridged) 
May 19, 2007 
 
Participants:Akira Kojima, chairman of the Japan Center for Economic 
ResearchKiichi Murashima, economist at Nikko Citigroup Securities 
Co.Kazuo Furukawa, president at Hitachi Ltd.Mitsuru Taniuchi, 
professor at Waseda University 
 
The Nihon Keizai Shimbun and the Japan Center for Economic Research 
held a debate on the state of the economy at the Nikkei Hall in 
Otemachi yesterday. The panelists shared the view that both domestic 
and external demand remains brisk although there are such risky 
elements as the slowdown of the United States economy. One 
participant said that the Japanese economy's growth potential is 
increasing owing to restructuring efforts by companies. All 
discussants estimated the nation's economic growth rate in FY2007 at 
a level in the lower 2% range. 
 
TOKYO 00002289  008 OF 010 
 
 
 
Attention focused on slowing US economy 
 
-- How do you analyze the current state of the Japanese economy? 
 
Taniuchi: The US experienced a decade-long economic expansion in the 
1990s. In Britain, the period of expansion has stretched to 15 
years. In the case of Japan, as well, conditions for a long-term 
economic expansion are being prepared. The supply side has become 
more competitive over the past ten years because Japan revised 
corporate legislation, including the Corporate Law, revised the 
Antimonopoly Act, scrapped the cross-shareholding system, and took 
deregulatory measures. 
 
Furukawa: Looking at the slowdown of the US economy, the temporary 
lull of capital investment, and the inventory adjustment of 
electronic components, we tend to see the Japanese economy as about 
to enter a prolonged "pause" in growth. But since such emerging 
countries as China and Russia are performing well, exports will 
remain steady. Capital investment is also showing a very steady 
tone. Once the long period of deflation is set to end, spending 
habits will improve. The economy is expected to pick up again in the 
latter half of 2007. 
 
Murashima: Personal spending and exports supported the economic 
growth in the January - March period. The focus is on whether these 
two main factors continue to be strong. Exports to developing 
countries have been on the rise. On consumption, however, I am 
carefully watching the trend. The hike in the tax on individual 
income in June, following the transfer of tax revenues to local 
governments, will cancel out increases in bonuses, so consumption 
may slacken in the summertime. 
 
Kojima: I think the current long-term economic expansion led by the 
private sector will last another year or more. The economy is in the 
final phase of emerging from deflation. The process of returning 
dividends and interest earnings from companies to household accounts 
is slowly setting in. Japanese companies are forming new business 
models as the economy globalizes. 
 
-- What do you think about risks looming over foreign countries' 
economies, such as the US economy? 
 
Murashima: In the US, only the housing market and some manufacturing 
industries are losing momentum, so there will be no adverse impact 
on the global economy and Japan's exports. The US consumption growth 
rate is expected to drop from the current annual 4% to 3%, but since 
increases in financial assets are likely to set off the drops in 
housing prices, I think the US economy will remain strong. 
 
Kojima: Under its renewed structure, the global economy is now able 
to grow even without depending on the economies of major member 
countries of the Organization for Economic Cooperation and 
Development (OECD). Demand from emerging countries is growing enough 
to cover the reduced portion of the US economy. In the US economy, 
unless the path of personal consumption slows down, demand will not 
significantly drop. 
 
Furukawa: I do not think the US economy will take a rapid downward 
turn. If consumer-price growth rates slow, the Federal Reserve Board 
(FRB) may lower interest rates. Even if the growth rate remains low, 
the US economy is expected to remain steady in tone. The Chinese 
economy's potential growth rate is likely to make a soft landing, 
 
TOKYO 00002289  009 OF 010 
 
 
possibly reaching 9%. 
 
Taniuchi: Even if the world economy is not in good shape, the 
Japanese economy may not be seriously affected, because its current 
economic growth is 70% dependent on domestic demand. 
 
-- How about future prospects for the Japanese economy? 
 
Kojima: The economic growth rate in real terms is expected to be 
2.5% in fiscal 2007 and fiscal 2008. The 225-issue Nikkei Stock 
Average at the end of the year may likely be on the level of 18,000. 
The current moderate high-yen trend is expected to continue into the 
future. 
 
Murashima: I think the economy will grow about 2.2% in real terms 
both in FY 2007 and 2008. The Nikkei Stock Average may likely be the 
18,000 mark at the end of the year. 
 
Furukawa: In FY2007, I estimate that the growth rate will be around 
2% and that the value of the yen will start rising in the latter 
half of the year, reaching 115 yen to the dollar at the end of the 
year. 
 
Taniuchi: I presume that the economy will grow about 2.0-2.5% in 
real terms in FY2007. Even 2.5% is conceivable. Stock prices will 
also boost, I think. 
 
Requests to Abe administration coming in succession 
 
In the debate, panelists presented requests about Abe 
administration's economic policies. The administration released a 
program to accelerate the nation's growth dynamics in April, setting 
the goal of increasing the growth rate of productivity 1.5-fold 
during five years of period, Taniuchi criticized the program as 
lacking any basic strategy." He stressed that the administration 
should take measures to promote market principles, such as those to 
further promote deregulation and to make the labor market more 
flexible, listing specific cases in the US and Britain. 
 
Furukawa said: "It is necessary for industrial circles to more fully 
utilize IT (information technology) and promote innovation." 
 
On tax system reform, Furukawa referred to the about 40% effective 
corporate tax rate and said: "The rate should be lowered to enable 
Japanese firms to join international competition on an equal 
footing." Taniuchi insisted that the government should reduce the 
effective corporate tax rate to 35% but raise the consumption tax 
rate in order to reduce the government's huge debts. 
 
Kojima introduced a case in which more positive effects have been 
produced owing to a reduction in IT-related taxes than those 
generated by tax cuts. He said: "When the government decides to 
increase or reduce taxes, it should take a strategic point of view. 
If valuable financial resources are used, the government should keep 
in mind the need to boost potential growth and productivity. 
 
Over the Bank of Japan's financial policy, the participants shared 
the view that if the central bank raises the key interest rate once 
every six months, there will be only minor effect on the economy. 
Murashima made this prediction: "The BOJ would raise the interest 
rate in November. With the rate raised by 0.25% twice next year, the 
policy interest rate would be 1.25% at the end of next year." 
 
 
TOKYO 00002289  010 OF 010 
 
 
SCHIEFFER