"We are discussing what form an opportunity for communication between the government and the BOJ should take," Kan said at a press conference, amid the government's expectations that the central bank will take additional steps to combat the increasing deflationary pressure.
"Meeting on a regular basis is conceivable, rather than (having contacts) in a confidential fashion," said Kan, who is also deputy prime minister and minister in charge of national strategy. "We have yet to decide the final format," such as the frequency of meetings and who would attend them.
The government hopes to hold the first such meeting by the end of this month to share views on the economy and financial markets as its opportunities for communication with the BOJ have been reduced due to the recent discontinuance of the Council on Economic and Fiscal Policy's meeting which the BOJ governor and relevant ministers used to attend.
But the BOJ remains concerned that closer communication with the government could mean greater government pressure on its monetary policy.
Observers say the DPJ-led government which was launched in mid- September wants the BOJ to steer monetary policy in an agile manner in line with the government's economic and fiscal policy.
The government also hopes the BOJ will increase purchase of government bonds, if necessary, when the government boosts such state debt issuance to cover tax shortfalls and necessary costs for its policy pledges, they added.
In a semiannual economic outlook report the BOJ released Friday, the central bank said it expects Japanese consumer prices to continue to fall for the three years through fiscal 2011, although the pace of projected decline would gradually slow down.
"This is a de facto deflation, and the BOJ should implement additional monetary easing," a senior Cabinet Office official said.
Some Cabinet ministers had vocally pressed the BOJ to continue its emergency corporate funding measures before the central bank announced last Friday its decisions to extend the expiration date of part of the support programs by three months while letting its corporate debt purchasing programs expire at the end of this year as scheduled.
One senior BOJ official, meanwhile, countered the government's move to seek regular meetings, saying, "We have had enough communication so far, and I don't see any reason to have closer contacts now."
The previous government led by the Liberal Democratic Party also tried to hold regular meetings between the prime minister and the BOJ chief and other officials when Prime Minister Junichiro Koizumi was in office, but this did not happen.
It is still unknown how the latest proposal for regular talks will turn out as even some government officials have expressed caution over the idea, with one of them saying, "It's better to leave things to the BOJ."
