By Keiko Ujikane and Keiichi YamamuraAug. 31 (Bloomberg) -- Taro Aso, secretary general of Japan's ruling Liberal Democratic Party, said he will seek to become prime minister after Shinzo Abe.
``If something happened, in case he resigns, then I will say yes,'' Aso told reporters in a group interview today in Tokyo. Aso spoke in English, responding to a question on whether he will seek to succeed Abe.
The LDP-led coalitions lost its Upper House majority in elections last month as voters angered by a botched pension system and government scandals opted for opposition candidates. Aso, 66, a former foreign minister, said Abe isn't to blame for the loss, which gave the Democratic Party of Japan and its allies ability to block legislation.
Aso also said Japan's economy, the world's second-largest, must be stabilized before the central bank raises interest rates.
``It's important the economy on the whole returns to a condition allowing the central bank to normalize interest rates,'' Aso said in Japanese. ``It's not as simple as saying a rate increase by the central bank will restore rates to normal.''
Consumer prices declined for a sixth straight month in July, a government report showed today, signaling the economy has yet to overcome a decade of deflation. Industrial production and household spending dropped.
Bank of Japan Governor Toshihiko Fukui said last week the central bank will decide policy by examining economic data and financial-market moves.
Rate Increase Odds
Investors see a 18 percent chance policy makers will raise the key rate at their Sept. 18-19 meeting, according to Credit Suisse Group calculations based on interest payments.
``There's no inflation in Japan,'' Aso said. ``When demand for borrowing remains weak and there's excessive liquidity in the economy, the effect of monetary policy is limited.''
Japan's latest Cabinet changes aren't a sign that infighting has resumed among the Liberal Democrats, Aso said, rejecting criticism that the appointment of five faction leaders to key government posts shows that subgroups within the party regained influence lost under former Prime Minister Junichiro Koizumi.
``It's not that factionalism is back,'' Aso also said. ``It's a result of putting the right people in the right place.''
Japanese leaders have often sought to balance the influence of factions within their party when assigning Cabinet posts, a practice Koizumi abandoned when he became prime minister in 2001.
To contact the reporters on this story: Keiichi Yamamura in Tokyo at kyamamura@bloomberg.net ; Keiko Ujikane in Tokyo at kujikane@bloomberg.net .
Last Updated: August 31, 2007 06:45 EDT
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