The Bank of Japan faced strong political pressure to decline from a quick end to its ultra-easy monetary policy as Junichiro Koizumi, the Prime Minister, urged caution so as not to halt a hard-won economic recovery. The yen had its largest fall in a month, when Koizumi urged the central bank to ‘make a careful decision’ during deciding whether to end its five-year deflation-fighting policy this week. Koizumi called a dinner meeting for his main economic advisers on Monday, including Toshihiko Fukui, the governor of the central bank. Last week, Japanese stocks were sad by growing expectations that the central bank would scrap its five- year-old policy of flooding the banking system with huge amounts of surplus funds, known as quantitative easing’. Speculation of a policy change by the bank, taking place this week, was spurred by a higher reading on consumer price inflation last Friday.

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