Japan's top government spokesman said yesterday that North Korea's missile launches won't hurt Japan's economy or influence the central bank's decision on interest rates.
"There is no impact on the economy from North Korea's missile launches," Chief Cabinet Secretary Shinzo Abe told reporters. "When the Bank of Japan makes a policy decision, we think there is no need to take this problem into consideration. We have no intent to ask the BOJ to consider it."
With Japan's economy recovering, many investors and analysts expect the central bank to raise interest rates a quarter point at its policy meeting next week -- or the meeting after that in August. The bank has not raised interest rates in nearly six years and has kept rates at zero since March 2001 to spur growth.
PHOTO: AP
Still, jitters over the North Korean missile tests sparked declines on Japan's stock market, with the benchmark Nikkei 225 index closing down 1.3 percent yesterday after dropping 0.73 percent on Wednesday.
North Korea confirmed that it had fired seven rockets which fell into the sea without causing damage or injuries, government officials say. One of the missiles was believed to be the Taepodong-2, which may have the capability to reach parts of the US.
Worries about regional stability caused by the incident also sent the yen lower and the US dollar higher. The US dollar was trading at ¥115.48 in Tokyo midafternoon, down ¥0.23 from late Wednesday in New York.
Bolstering expectations for a rate hike soon, Bank of Japan Governor Toshihiko Fukui told a quarterly meeting of the central bank's branch managers yesterday that the nation's economic recovery remains on track.
"The economy will likely expand based on a favorable economic recovery cycle led by production, income and expenditure," Fukui said.
Separately, Japan's trade ministry wants to relax guidelines on mergers as the current rules could discourage companies from tying the knot, an official said yesterday.
The ministry would like an increase in the size of the domestic market share threshold -- the market share allowed for a company after a merger -- from 35 percent to 50 percent, said Ichiro Abe, a deputy director at the Ministry of Economy, Trade and Industry.
"The current market share limited in the guidelines may prevent companies from trying to merge," Abe said, confirming a report in the London-based Financial Times.
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