TOKYO, April 16 (Reuters) - The Bank of Japan should ditch its self-imposed cap on government debt buying to reflate the economy and target 2 percent inflation in around two years, a leading member of a group of 130 ruling party lawmakers said.
The BOJ should also help weaken the yen to as low as 120 to the dollar by implementing all-out monetary easing to support Japanese exporters, Motohisa Ikeda told Reuters in an interview.
Currency intervention would be justified to achieve this end, he added, citing that the current dollar/yen rate is far below purchasing power parity levels.
Ikeda's group asked the ruling Democratic Party of Japan this week to include its anti-deflation proposals in the party's campaign platform for upper house elections expected in July.
"Japan must overcome deflation by normalising its currency rates and carrying out drastic monetary easing. We must make it clear that this administration is trying to reflate the economy," Ikeda said.
"I think it would be justified if Japan stepped into the markets to bring yen rates into line with actual conditions."
It is unclear if the proposals, compiled by the group of mostly junior lawmakers, would make their way into the ruling party's campaign platform. (Reporting by Tetsushi Kajimoto; Additional reporting by Sumio Ito; Editing by Hugh Lawson)