Japan’s incoming prime minister, Shigeru Ishiba, yesterday said that the country’s monetary policy must remain accommodative as a trend, signaling the need to keep borrowing costs low to underpin a fragile economic recovery.
It was not immediately clear whether Ishiba, who had been a vocal critic of the Bank of Japan’s (BOJ) past aggressive monetary easing, was taking a more dovish line with his remarks.
“It’s something the Bank of Japan, which is mandated to achieve price stability, will decide while working closely with the government,” Ishiba told public broadcaster NHK, when asked about further interest rate increases by the central bank.
Photo: Reuters
“From the government’s standpoint, monetary policy must remain accommodative as a trend given current economic conditions,” he said.
On fiscal policy, Ishiba said he would aim to compile a package of measures at an early date to cushion the economic blow from rising living costs, with a focus on helping low-income households.
Ishiba, a former defense minister, is set to become prime minister tomorrow after winning the presidency of the ruling Liberal Democratic Party on Friday.
After his victory, Ishiba said monetary policy would broadly remain loose but suggested he would not push back against further increases in still near-zero interest rates.
The BOJ ended negative interest rates in March and raised short-term borrowing costs to 0.25 percent in July in a landmark shift away from a decade-long, radical stimulus program.
BOJ Governor Kazuo Ueda has signaled a readiness to raise rates further if Japan makes progress toward durably achieving the bank’s 2 percent inflation target, as the board projects it would.
Ishiba told Reuters last month that the BOJ was on the “right policy track” by ending negative rates and endorsed further normalization of monetary policy, saying it could boost industrial competitiveness. However, in an interview this month, he said Japan must prioritize making a full exit from deflation and warned of weak signs in consumption.
Former minister of health, labor and welfare Katsunobu Kato is set to become Japan’s next finance minister, according to Kyodo News, replacing Shunichi Suzuki to take on the job of steering the country’s finances through a period of economic change.
Kato helped guide Japan through the COVID-19 pandemic, when the country fared better than most of its G7 peers. The 68-year-old has played key roles in recent administrations and was a Ministry of Finance official before going into politics.
Kato would be taking on one of the highest-profile positions in the Cabinet, overseeing a range of policies from currency to budgets. Among the challenges he would face is Japan’s perennial problem of the largest debt load among advanced economies. The debt problem is set to become more complicated as the BOJ slowly moves toward more interest rate hikes, which would keep increasing debt-servicing payments.
In a Bloomberg interview last month, Kato said Japan should continue to aim for interest rates and prices to “keep moving.”
He said years of stagnant prices and rates “created structural distortions.” Kato has advocated for a balanced approach to managing fiscal health and seeking growth.
Kato’s predecessor Suzuki repeatedly said the government should watch the impact from rising yields on debt-servicing costs, warning that higher yields could weigh on finances.
Japan’s debt reached 255 percent of its GDP this year, according to the International Monetary Fund.
Additional reporting by Bloomberg
TECH PARTNERSHIP: The deal with Arizona-based Amkor would provide TSMC with advanced packing and test capacities, a requirement to serve US customers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is collaborating with Amkor Technology Inc to provide local advanced packaging and test capacities in Arizona to address customer requirements for geographical flexibility in chip manufacturing. As part of the agreement, TSMC, the world’s biggest contract chipmaker, would contract turnkey advanced packaging and test services from Amkor at their planned facility in Peoria, Arizona, a joint statement released yesterday said. TSMC would leverage these services to support its customers, particularly those using TSMC’s advanced wafer fabrication facilities in Phoenix, Arizona, it said. The companies would jointly define the specific packaging technologies, such as TSMC’s Integrated
An Indian factory producing iPhone components resumed work yesterday after a fire that halted production — the third blaze to disrupt Apple Inc’s local supply chain since the start of last year. Local industrial behemoth Tata Group’s plant in Tamil Nadu, which was shut down by the unexplained fire on Saturday, is a key linchpin of Apple’s nascent supply chain in the country. A spokesperson for subsidiary Tata Electronics Pvt yesterday said that the company would restart work in “many areas of the facility today.” “We’ve been working diligently since Saturday to support our team and to identify the cause of the fire,”
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
Sales RecORD: Hon Hai’s consolidated sales rose by about 20 percent last quarter, while Largan, another Apple supplier, saw quarterly sales increase by 17 percent IPhone assembler Hon Hai Precision Industry Co (鴻海精密) on Saturday reported its highest-ever quarterly sales for the third quarter on the back of solid global demand for artificial intelligence (AI) servers. Hon Hai, also known as Foxconn Technology Group (富士康科技集團) globally, said it posted NT$1.85 trillion (US$57.93 billion) in consolidated sales in the July-to-September quarter, up 19.46 percent from the previous quarter and up 20.15 percent from a year earlier. The figure beat the previous third-quarter high of NT$1.74 trillion recorded in 2022, company data showed. Due to rising demand for AI, Hon Hai said its cloud and networking division enjoyed strong sales
RSS