BOJ policy to boost yen could be an option to curb inflation, Japanese minister says
- Financial markets are pricing in roughly a 60% chance that the BOJ will raise interest rates on April 28
TOKYO: Bank of Japan monetary policy could be an option to tame rising prices by boosting the yen, Japan’s trade minister said on Sunday, as the central bank weighs raising interest rates this month to counter inflation spurred by the Iran war.
Ryosei Akazawa, Japan’s top trade negotiator and head of the Ministry of Economy, Trade and Industry, was responding to an economist’s suggestion on a television talk show that a stronger yen would help offset higher crude-oil import costs.
Hideo Kumano, chief economist at Dai-ichi Life Research Institute, said on the programme on public broadcaster NHK that if BOJ policy were used to strengthen the yen by around 10% to 15%, it could suppress price rises across the economy, including on food, which accounts for a large share of household spending.
“While watching the impact on the economy, I think that considering things in the direction of what Mr. Kumano just mentioned could be possible as one option,” Akazawa said, adding that the BOJ’s 2% inflation target was “quite close” to being achieved while real interest rates remained “quite low”.
Financial markets are pricing in roughly a 60% chance that the BOJ will raise interest rates on April 28.
BOJ Deputy Governor Ryozo Himino said on Friday the central bank will guide monetary policy with an eye on the scale and length of the economic shock caused by the Middle East war, highlighting the need for vigilance to the risk of stagflation. ‑Reuters
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