🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

BOJ should wait at least six months for rate hike, says opposition kingmaker

Published 11/01/2024, 05:31 AM
Updated 11/01/2024, 06:46 AM
© Reuters. FILE PHOTO: People walk in front of the Bank of Japan building in Tokyo, Japan January 23, 2024. REUTERS/Kim Kyung-Hoon/File Photo

By Makiko Yamazaki, Takaya Yamaguchi and Tim Kelly

TOKYO (Reuters) -The Bank of Japan should wait for at least six months before hiking interest rates, until there are signs of sustainable wage gains above inflation, the head of the opposition party that the ruling LDP is courting for support said.

"There should be no significant changes to monetary policy, as we need to observe the wage growth trends from next year's spring negotiations," Yuichiro Tamaki, head of the opposition Democratic Party for the People (DPP), said in an interview with Reuters.

Following Japan's general election on Oct. 27, Tamaki's party has gained influence over government policy as the ruling Liberal Democratic Party seeks its support to maintain power.

The LDP and its coalition partner Komeito are 18 seats short of a majority in the 465-member lower house, while the DPP, which is advocating for higher wages and cuts to both the country’s sales tax and income tax, saw its seat count rise from seven to 28.

The Bank of Japan ended negative interest rates in March and raised short-term rates to 0.25% in July on the view that Japan was making progress towards durably achieving its 2% inflation target.

It held short-term rates at 0.25% at Thursday's policy meeting but said risks around the U.S. economy were somewhat subsiding, signalling that conditions are falling into place to raise interest rates again.

Still, Tamaki said that it is necessary to eventually normalise monetary policy and allow the market to function properly.

© Reuters. A banknote of Japanese yen is seen in this illustration picture taken June 15, 2022. REUTERS/Florence Lo/Illustration/File Photo

Tamaki said maintaining easy monetary policy may push the yen down. "But it is the strength of the U.S. economy that keeps the gap between U.S. and Japanese interest rates wide and monetary policy should not be used to manipulate currency rates," he said.

He declined to comment on current currency levels but said currency interventions have only a short-term impact, although they could act as a deterrent to speculative moves.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.