TOKYO, Sept 14 (Askume) – Japan’s Economy and Security Minister Sanae Takaichi, the ruling party’s leading candidate for re-election, said on Friday the central bank should not raise interest rates now because the economy is on the brink of disaster but that is the case.
Gao Yi, who is emerging as a strong candidate for the leadership of the Liberal Democratic Party, said on her personal YouTube channel, “The economy has just started to recover and is about to completely shed the deflationary mindset, so our fiscal policy should not be tightened.”
He said consumer inflation may exceed the Bank of Japan’s (BOJ) 2% target, but excluding the impact of fresh food and energy, the index has not yet broken that level.
“Japan has not yet reached the optimal situation of rising inflation coupled with high wages and strong consumption,” he said.
Highlighting the need to boost consumer confidence, Gao Xi said: “Therefore, the government should not cut fiscal spending. Neither should it raise interest rates.”
The Liberal Democratic Party will elect a new leader on September 27. Since the party has a majority in parliament, the winning candidate will become prime minister.
Current Prime Minister Fumio Kishida announced last month that he would resign as president of the Liberal Democratic Party in September, ending his three-year term as leader of the world’s fourth-largest economy.
The Bank of Japan ended negative interest rates in March and raised short-term interest rates to 0.25% in July as the economy looked to make progress toward its 2% inflation target.
Bank of Japan Governor Kazuo Ueda said the central bank is ready to raise interest rates if inflation stays around 2% over the next few years and wages rise steadily, as is currently expected.
Most economists surveyed by Askume expect the Bank of Japan to raise interest rates again this year, with more than three-quarters expecting a rate hike in December. None in the survey expected a rate hike next week.
