A man walks past the Bank of Japan headquarters in central Tokyo. — AFP
TOKYO: One of the leading candidates to become Japan’s next prime minister says it is too soon for the Bank of Japan (BoJ) to move away from an ultra-easy policy, as the nine lawmakers set to contest this month’s ruling party election sparred during a press conference.
Sanae Takaichi, a well-known dove on fiscal and monetary policy, said last Saturday that since inflation was being driven by high costs of energy, food and other commodities, the BoJ should be more cautious about raising interest rates.
“I believe that monetary easing should continue,” she said. “Interest rates should remain low because it should not become difficult for young people to buy homes or for companies to make investments that will increase productivity in society.”
All of the candidates for the Sept 27 election to become leader of the ruling Liberal Democratic Party have put forward ideas to boost economic growth in their campaign pledges, but most have been wary of appearing to put pressure on the BoJ.
The winner of the race will also need to confront issues including China’s diplomatic and military tensions with Japan and its allies, paying for the needs of an ageing and shrinking population, and dealing with the nation’s massive government debt.
The BoJ policy board will hold a two-day meeting ending Sept 20 at which it’s widely expected to hold policy steady after two rate rises this year.
Economists generally expect more hikes later this year or early in 2025. The central bank has said that financial conditions remain accommodative after the two rate moves.
Takaichi, an advocate of the aggressive economic stimulus policies of former Prime Minister Shinzo Abe, has been more willing to call for the BoJ to suspend its policy normalisation, and support for her appears to be relatively strong.
A survey published last Friday by NNN News of LDP members and party supporters showed that Takaichi had 22% support, behind only 25% for former defence minister Shigeru Ishiba.
Ishiba and ex-environment minister Shinjiro Koizumi are ahead in most public opinion polls. — Bloomberg
