TOKYO, Sept 14 (Askume) – Japan’s Economy and Security Minister Sanae Takaichi, the ruling party’s lead candidate, said on Saturday the central bank must maintain ultra-low interest rates to support the fragile economic recovery it needs.
“To be honest, it’s too early,” he said at a news conference with nine candidates when asked about the Bank of Japan (BOJ) raising interest rates this year.
“Interest rates should be kept low,” said Koichi, who is emerging as a strong candidate for the leadership of the Liberal Democratic Party (LDP).
Gao’s remarks follow comments he made on his personal YouTube channel on Friday, in which he stressed the need to maintain fiscal and monetary support for the economy.
The Bank of Japan ended negative interest rates in March and raised short-term interest rates to 0.25% in July, arguing that the economy was achieving 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.
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.
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.
Most U.S. candidates from the liberal Democratic Party have called for spending plans to soften the blow of rising costs of living, but they have not provided details about how the additional costs would be funded.
Taro Kono, the minister in charge of digitalization, said increased spending or continued generous subsidies would not boost economic growth.
Kono said on Saturday that Japan should discuss how to improve its fiscal health as rising interest rates will increase the cost of financing its massive public debt.
Another candidate, ruling party official Toshimitsu Motegi, said the government could use its huge reserves for currency intervention to pay for various expenses.
Motegi Toshimitsu said that while most reserves are currently invested in US Treasury bonds, Japan may consider investing some funds in other assets to obtain better returns.
