Prime Minister Sanae Takaichi expects the Bank of japan to raise its policy interest rate in the near future, Etsuro Honda, an economic adviser to the leader, has said in a recent interview.
“I think that an additional rate hike of 0.25 percentage point in the not-so-distant future is within the prime minister’s expectations,” Honda, former special adviser to the Cabinet, said, suggesting that she would tolerate a rate increase from the current 0.75% to 1%.
Still, Honda expressed skepticism about the possibility of implementing such a hike this spring, saying, “March or April would be too early.”
Honda is known for backing Abenomics, the reflationary policy mix of the late former Prime Minister Shinzo Abe. Abenomics features monetary easing, among other stimulative measures.
Prime Minister Sanae Takaichi, leader of the ruling Liberal Democratic Party, speaks during a news conference at LDP headquarters in Tokyo on Monday.
| POOL / VIA AFP-JIJI
“Abenomics had a clear goal of overcoming deflation, but now we are in an inflationary trend,” Honda said. “I think (Takaichi) no longer holds the view that interest rates should be lowered further,” he said.
Regarding recent foreign exchange market developments, Honda said that the prime minister is “thinking about leveraging the yen’s weakness to promote the recovery of the Japanese economy, rather than correcting the depreciation of the Japanese currency.”
Honda added that Takaichi sees the need to address the yen’s excessive decline, which is a concern among financial market players.