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Abe
kept most top posts unchanged in the limited cabinet reshuffle
that followed his cabinet's approval on Tuesday of 13.5 trillion
yen ($133.25 billion) in fiscal steps to try to revive the
economy mired in more than 15 years of deflation.
"The utmost priority is the economy," Abe told a news
conference.
"While facing up to risks posed by the global economy, we'll use
all policy tools to accelerate the escape velocity out of
deflation to the maximum.
The government and the Bank of Japan would work together to
defeat deflation, Abe said, adding that he believed the central
bank would take firm policy steps to achieve its 2 percent
inflation target.
"Specific policy steps should be left up to the BOJ to decide. I
trust Governor (Haruhiko) Kuroda's ability," he added.
The premier said labor market reform was "the biggest
challenge", referring to structural reforms in his broader,
three-pronged strategy to reinvigorate the moribund economy.
Abe pledged on Wednesday to map out a implementation plan on the
way for people to work by the end of current fiscal year to
March 2017.
Three years of reflationary monetary, fiscal and reform policies
dubbed "Abenomics" have done little to revive the world's
third-largest economy, and financial markets are growing worried
that the Bank of Japan is running out of ammunition.
The BOJ disappointed markets on Friday by keeping bond purchases
steady, defying expectations it would hoover up more, and made
traders even more nervous after announcing it would re-evaluate
policies in September.
On Tuesday, Kuroda declined to comment on a recent spike in
government bond yields but said the planned review will not lead
the BOJ to weaken its stimulus.
Tokyo stocks have also sold off on concerns that the latest
fiscal stimulus package does not contain enough new and direct
spending and is spread over several years, diluting its economic
impact.
(Additional reporting by William Mallard and Elaine Lies;
Editing by Kim Coghill)
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