6 days ago
LDP's Kono adds to chorus urging BOJ to tighten policy
A member of parliament in the Liberal Democratic Party added his voice to those calling for the Bank of Japan to tighten monetary policy to bolster the yen.
"Now the economy is with inflation and interest rates, so we should have new economic policies,' Taro Kono said in a news conference Wednesday. "Now what we need is tight monetary policy to bring the yen stronger.'
Kono's remarks come after several prominent executives made similar pleas. Takeshi Niinami, speaking as chair of the Japan Association of Corporate Executives, said last week that the weak yen is hurting households by driving up costs. "Every tariff issue will be settled and then I believe the BOJ must increase interest rates,' said Niinami, who is also chief executive officer of Suntory Holdings.
The head of Japan's largest bank called for the BOJ to raise its policy rate as early as the next meeting, given the outlook for higher inflation in the country.
"Our official company view sees March next year as a possible timing of the rate hike. But personally, I think September or October is quite possible,' Hironori Kamezawa, CEO of Mitsubishi UFJ Financial Group, said in an interview published Tuesday.
After touching a high for the year around ¥140 to the dollar in April, Japan's currency weakened back toward ¥150 per dollar after BOJ Gov. Kazuo Ueda made dovish comments following last week's board decision to hold the benchmark rate steady. The yen was trading around ¥147.55 per dollar at midday in Tokyo Wednesday.
After the U.S.-Japan trade deal was announced in late July, economists brought forward their predictions on when the BOJ might next hike, with more than 40% forecasting a move at its October policy meeting. No economists expect a move when authorities next set policy on Sept. 19, but over half of respondents expect another increase before the end of the year.
Kono is a prominent politician who has served in Cabinet positions including head of foreign affairs, defense and most recently digital transformation. Kono spoke at a time when Japan's political leadership is under pressure after the ruling coalition lost its majority in the Upper House in an election last month.
Kono argued that leading up to that election, the government should have asked the BOJ to raise rates in return for a pledge to cut back on spending and to balance the nation's budget as soon as possible.
"We should have done that, but we didn't,' he said.
