Japan PM Kishida urges BOJ to keep ultra-low rate policy
2022.04.26 17:01
FILE PHOTO: Japan’s Prime Minister Fumio Kishida attends a news conference in Tokyo, Japan April 26, 2022. David Mareuil/Pool via REUTERS
By Leika Kihara
TOKYO (Reuters) -Japanese Prime Minister Fumio Kishida on Tuesday urged the central bank to maintain its ultra-loose monetary policy, brushing aside the idea of using interest rate hikes to prevent further declines in the yen.
Prospects of widening U.S.-Japan interest rate differentials have pushed the yen down to two-decade lows against the dollar, stoking fear among lawmakers that a weak currency could do more harm than good to the economy by pushing up import costs.
With the U.S. Federal Reserve eyeing aggressive interest rate hikes, some market players have speculated that Kishida’s administration may pressure the Bank of Japan (BOJ) to modify its ultra-loose monetary policy to stem further falls in the yen.
Kishida said currency levels were the consequence of various factors including economic and monetary policies.
“The BOJ is undertaking its current policy to achieve its 2% inflation target,” Kishida told a news conference.
“The government hopes the central bank continues with its efforts to achieve the goal,” he said, when asked whether the BOJ should tweak its ultra-loose policy to prevent further declines in the yen.
When asked about the yen’s recent weakness, Kishida declined to comment on specific levels but said that rapid currency moves were undesirable.
Appearing in a television programme later on Tuesday, Kishida said the government must look at both the positive and negative impact a weak yen could have on the economy.
“A weak yen is positive for exports and Japanese companies with overseas assets. But it hurts people’s livelihood and businesses by pushing up prices,” Kishida said.
The government’s emergency relief package will help mitigate the impact of rising raw material costs on households and retailers, he said.
In the long run, Japan must take steps to become more energy efficient to reduce outflows of domestic income, while drawing in more money from overseas by promoting exports and inbound tourism, Kishida said.
“Our goal would be to achieve currency stability with such economic policies,” he said.
The BOJ is widely expected to keep its ultra-low interest rate targets unchanged at a two-day policy meeting that ends on Thursday.
