Bank of Japan’s rate hike timing secondary to economy’s readiness: ex-BOJ Deputy Governor Wakatabe

[TOKYO] Former Bank of Japan Deputy Governor Masazumi Wakatabe said on Thursday that the timing of a potential interest rate hike is less important than whether the economy can withstand tighter monetary policy.

“Whether the Bank of Japan raises rates in June is not the essential issue. What really matters is whether the economy is in a condition where the Bank of Japan can raise interest rates,” Wakatabe said, speaking at a meeting of a pro-spending bloc within the ruling Liberal Democratic Party.

Wakatabe, professor at Waseda University, is a member of the government’s key economic panel, the Council on Economic and Fiscal Policy.

Although private consumption is picking up, consumer sentiment remains weak with the Middle East conflict pushing up prices, he said.

Asked whether the BOJ would raise interest rates in June, Wakatabe said the central bank has independence and it can make decisions “on its own responsibility”.

The BOJ kept its policy rate steady at 0.75 per cent last month to assess repercussions from the conflict, but three of the central bank’s nine board members dissented and called for a hike to 1 per cent, signalling growing alarm over inflationary pressures from the war-driven energy shock. REUTERS