By Leika Kihara
TOKYO (Reuters) – Japan’s incoming Prime Minister Shigeru Ishiba said on Sunday the country’s monetary policy should remain accommodative as a trend, pointing to the need to keep borrowing costs low to shore up a fragile economic recovery.
It was not immediately clear whether Ishiba, who had been an outspoken critic of the Bank of Japan’s aggressive monetary easing in the past, was taking a more dovish line with his comments.
“It is something that the Bank of Japan, which has the mandate to achieve price stability, will decide while working closely with the government,” Ishiba told public broadcaster NHK, when asked about further rate increases. interest from the central bank.
“From the government’s point of view, monetary policy should remain an accommodative trend given the current economic conditions,” he said.
On fiscal policy, Ishiba said he will try 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, will become prime minister on Tuesday after winning the presidency of the ruling Liberal Democratic Party on Friday.
After his victory, Ishiba said monetary policy would remain generally loose, but suggested he would not oppose further increases in interest rates still close to zero.
The Bank of Japan ended negative interest rates in March and raised short-term borrowing costs to 0.25% in July, in a historic shift away from a radical, decade-long stimulus program.
Bank of Japan Governor Kazuo Ueda has signaled his willingness to raise rates further if Japan moves toward lasting achievement of the bank’s 2% inflation target, as the board projects.
Ishiba told Reuters in August that the BOJ was on the “right policy path” in ending negative rates and backed further normalization of monetary policy, saying it could boost industrial competitiveness. But in an interview this month, he said Japan must prioritize a full exit from deflation and warned of weak signals in consumption.
The yen, which fell on Friday on news that a moderate rival would join Ishiba in a runoff for the LDP leadership, rebounded with his victory.