Japanese Prime Minister Fumio Kishida on Tuesday urged the central bank to maintain an ‘ultra’ loose monetary policy. This is seen as if he is setting aside the idea of raising interest rates to prevent further depreciation of the yen.
The outlook for an interest rate hike has pushed the yen to a two -decade low against the US dollar. This has sparked concerns among lawmakers that a weak currency could do more harm than good to the economy.
Plus pressure from the United States Federal Reserve (U.S.) is planning to raise interest rates more aggressively. Thus on that basis, many among market players speculated that the Kishida administration is likely to put pressure on the Bank of Japan (BOJ) to modify its very loose monetary policy to curb further falls in the yen.
According to Kishida, "The BOJ is implementing its current policy to achieve the 2%inflation target". On that basis, he added, "The government hopes the central bank will continue its efforts to achieve that goal." The statement was his counter -statement when asked whether the BOJ should modify its ultra loose policy to avoid further declines in the yen.
When asked about the yen’s recent weakness, Kishida declined to comment on the specific level but said that the rapid movement of the currency was undesirable.
Kishida said, "A weak yen is positive for exports and Japanese companies with overseas assets but it affects people's livelihoods and businesses as it will drive up prices."
In the long run, Japan must take steps to become more energy efficient to reduce domestic income outflows, while attracting more investment from abroad by promoting exports and tourism, Kishida said.
"Our goal is to achieve currency stability with such economic policies," he said.
The BOJ is widely expected to keep its ‘ultra -low’ interest rate target unchanged at the two -day policy meeting that ends on Thursday.
