Japan’s Ishiba rules out BOJ interest rate hikes for now
JAPAN’S Prime Minister Shigeru Ishiba said the economy is not ready yet for further interest rate hikes, following a first meeting with Bank of Japan governor Kazuo Ueda on the first full day of his new administration.
Ishiba said conditions were not right for the BOJ to move again following two interest rate hikes earlier this year, in comments that jolted the yen to its weakest against the US dollar for the day.
The comments came after a flurry of signalling on Wednesday (Oct 2) that Ishiba’s government has no desire for now to see the central bank raise borrowing costs further. Ministers played down the premier’s appetite for monetary policy normalisation and highlighted the need for the central bank to focus on the unfinished task of eradicating deflation.
On a busy start for his government, Ishiba also spoke with US President Joe Biden and South Korean leader Yoon Suk Yeol as he looked to underscore from the get-go the importance of ties with key allies amid growing security tensions in Asia.
At the meeting between Ishiba and Ueda, the central bank chief qualified his commitment to raising interest rates if the economy and prices match the BOJ’s forecasts, according to his comments after the talks.
“While we will adjust the degree of monetary easing if the economy and prices match our forecasts and the economy works as we expect, I also told him we want to look carefully to see if that really is the case because we have sufficient time to do so,” Ueda told reporters at the prime minister’s residence.
The comment added to signs that the BOJ will pause before raising rates again after its first hikes in 17 years.
While it’s common for Japan’s central bank chief to hold regular meetings with the nation’s leader, Ueda’s visit came at an unusually early stage of the new administration, an indication that Ishiba’s government is determined to coordinate closely with the central bank and dispel any impression it seeks rapid rate hikes. BLOOMBERG
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