An important ally of Japanese Prime Minister Ishinabe Shigeru stated that the new Japanese government trusts the Bank of Japan's decisions and will work closely with the central bank to eliminate the risk of Japan falling back into deflation.
Economic Minister Akira Akazawa, newly appointed by Ishinabe Shigeru, said on Tuesday that both Ishinabe Shigeru and Bank of Japan Governor Haruhiko Kuroda believe that defeating deflation is their top priority and will continue to adhere to the joint policy agreement reached in 2013 to achieve this goal.
Akazawa acknowledged that he could accept gradual interest rate hikes before completely getting rid of deflation, as long as the loan environment does not deteriorate excessively and cause a shock to the Japanese economy or market.
Akazawa said: "I believe we can work closely together to overcome deflation. I expect the Bank of Japan to continue to ensure full communication and close cooperation with the government, and implement appropriate monetary policy management to achieve the 2% price stability target in a sustainable and stable manner."
Advertisement
Since last week, Japanese government officials have been trying to reassure investors that there will be no significant changes in Ishinabe Shigeru's policies compared to former Prime Minister Kishida Fumio. Before the officials made the above remarks, there was a sharp fluctuation in the Japanese market, indicating that investors were uneasy about the intentions of the new government.
This year, the Bank of Japan has reduced monetary stimulus measures and raised interest rates twice.
Akazawa called for a cautious judgment on the timing of another interest rate hike at the beginning of Ishinabe Shigeru's tenure, which attracted attention and affected the market. Ishinabe Shigeru further emphasized these remarks and stated that Japan is currently not ready for interest rate hikes.
On Tuesday, Akazawa insisted on staying consistent with the Bank of Japan, emphasizing their common goal of ensuring that the Japanese economy does not fall back into a state of falling prices again.
For more than two years, Japan's price increases have remained at or above the Bank of Japan's 2% target level, but the Japanese government has not yet announced the end of deflation.
Ishinabe Shigeru has set a three-year time frame to achieve this goal, indicating that his government is not in a hurry to reduce support for the economy.
Leave a Comment