Japan’s incoming PM Ishiba advocates loose monetary policy

Japan’s incoming Prime Minister Shigeru Ishiba said on Sunday the country must maintain accommodative monetary policy to support the fragile economic recovery.

While he had previously criticised the Bank of Japan‘s (BOJ) aggressive easing, Ishiba now advocates for low borrowing costs.

“It’s something the Bank of Japan, which is mandated to achieve price stability, will decide while working closely with the government,” Ishiba told public broadcaster NHK, when asked about further interest rate increases by the central bank.

He also highlighted the need for fiscal measures to address the impact of rising living costs, particularly for low-income households. Set to assume office on Tuesday, Ishiba aims to swiftly implement economic support measures.

Following his win, Ishiba indicated that monetary policy would broadly remain loose, hinting at a possible acceptance of future interest rate hikes despite the current near-zero levels.

The BOJ recently ended negative interest rates and raised short-term borrowing costs to 0.25 per cent in a significant departure from its long-standing radical stimulus approach.

Governor Kazuo Ueda has expressed a willingness to raise rates further if Japan moves closer to achieving the bank’s 2 per cent inflation target, as projected by the board.

Attribution: Reuters

Subediting: Y.Yasser