Bank of Japan Governor Toshihiko Fukui today attempted to calm down mounting political pressure on the central bank not to end its four-and-half-year-old super-loose monetary policy, saying there is no disagreement in principle between the central bank and the government on policy management. There were strong reactions from politicians after Fukui said last week that quantitative monetary easing could not remain in place indefinitely and that conditions were emerging that could see it end as soon as the beginning of the next fiscal year. In rare remarks on central bank policy, Prime Minister Junichiro Koizumi said earlier this week that it may be to soon to end the policy because deflation appears to be persisting. And Hidenao Nakagawa, the ruling Liberal Democratic Party's policy chief, said last Sunday that while the central bank has "independence in policy measures.. they must also coordinate policy goals with the government." "And if the central bank does not understand this, we may have to change the BoJ Law," Nakagawa said. The government is now concerned that halting the policy now would be viewed as a de-facto credit tightening by the financial markets, and may hamper the country's still tentative economic recovery. "There is no basic difference between the government and the Bank of Japan, in that we continue quantitative easing while the year-over-year change in the consumer price index remains negative," Fukui said at a press conference today, without reiterating his urge to end the super-loose monetary policy. "The Bank of Japan's foremost responsibility is not to achieve economic growth but to seek price stability and support growth through that target," he added. The Bank of Japan has committed itself to maintaining the present loose monetary policy until three conditions for changing it are all met: the year-on-year change in the national monthly core CPI must remain above zero for a prolonged period; there must be no sign of it again slipping below zero; and the economy should be growing steadily. Fukui also said the central bank should be able to maintain its policy with some latitude, as inflationary pressure is unlikely to rise drastically. "Zero-interest rate policy is different from quantitative easing, in that it does not oppress the interest rate environment," he said. While toning down hopes to ending a quantitative monetary easing, Fukui repeated that the end to the present policy framework would likely come "over the course of the fiscal year 2006", which starts on April 1. Yasunari Ueno, chief market analyst at Mizuho Securities, said the BoJ may need to reconsider its stance and give up its hope of ending the quantitative monetary easing entirely. But a majority of analysts think the BoJ will not succumb. "Despite jawboning by politicians, the consensus view (in the market) that the BoJ may call off the super-loose monetary policy as early as April next year has not changed a bit," Mitsubishi UFJ Securities strategist Katsutoshi Inadome said. JP Morgan chief economist Masaaki Kanno agrees. "Despite growing pressure from the government on the BoJ, JP Morgan basically maintains our BoJ call for an end to quantitative easing in April 2006, followed by an initial interest rate hike to 0.15 pct in July and to 0.25 pct in the fourth quarter of 2006."