Image: Reuters Berita 24 English - On Tuesday, Japanese Prime Minister Fumio Kishida made it clear that he thinks the central bank should ...
 |
| Image: Reuters |
Berita 24 English - On Tuesday, Japanese Prime Minister Fumio Kishida made it clear that he thinks the central bank should keep its ultra-loose monetary policy.
He said that sharp drops in the yen are "worrying," but that monetary policy and exchange rates must be dealt with separately.
"Monetary policy affects more than just exchange rates; it also affects the economy and the businesses of smaller firms," Kishida said in a debate with the leaders of other political parties. "All of these things need to be taken into account."
Then, Kishida asked Yuichiro Tamaki, who is in charge of a small opposition party called the Democratic Party for the People (DPP), what his party thought about monetary policy.
Tamaki said that the BOJ must keep interest rates where they are now, which are very low. He said that tightening monetary policy was "unthinkable" because it would raise mortgage rates and costs for businesses to borrow money.
After hearing Tamaki's point, Kishida said, "I agree with you that Japan shouldn't change its monetary policy."
On the markets, there is a lot of talk that the BOJ could change its yield curve control (YCC) policy and let bond yields rise more to keep the yen from falling even more, which would raise the price of imported fuel and food.
Since interest rates are expected to stay very low for a long time, policymakers have had few ways to stop the yen from falling other than to warn people verbally.
Finance Minister Shunichi Suzuki said on Tuesday that he was worried about the recent sharp drop in the value of the yen and that he would react to changes in the exchange market if necessary. He was repeating an earlier warning as the yen hovered near its lowest level against the dollar in 24 years.
"The government will keep in close touch with the Bank of Japan and keep a closer eye on the exchange market and how it affects the economy and prices," Suzuki said.
Kishida was taking part in a debate with other party leaders before the upper house elections on July 10.
