By Leika Kihara
TOKYO (Reuters) – Japanese Prime Minister Shigeru Ishiba said on Saturday he will not intervene in monetary policy matters, saying the central bank has a mandate to achieve price stability.
“It is important to avoid intervening vocally” in monetary policy matters, or giving the impression that he is doing so, Ishiba said at a news conference gathering leaders of major parties ahead of the Oct. 27 general election.
“Whatever the government has to say, the Bank of Japan makes an individual decision on policy,” Ishiba said. “I believe that the governor and the BOJ staff have a strong sense of responsibility regarding achieving price stability.”
Ishiba also said that strong consumption is the key to achieving a sustainable exit from deflation, and called for the need for measures to raise real wages.
The former defense minister became prime minister of Japan on October 1 after winning the ruling party’s leadership race.
A day after taking on the role, Ishiba stunned markets by saying the economy was not ready for further rate hikes, a marked reversal from his previous support for the BOJ unwinding decades of extreme monetary stimulus.
The surprisingly blunt comments pushed the yen lower against the dollar and raised new doubts about how aggressive the BOJ would be in raising rates.
It is historically rare for the country’s leader to publicly comment directly on the BOJ’s interest rate policy, as this would infringe on the central bank’s independence – enshrined in law – in setting monetary policy .
The BOJ ended negative interest rates in March and raised the short-term benchmark to 0.25% in July, as Japan made progress toward sustainably achieving its 2% inflation target.
Governor Kazuo Ueda has indicated that the bank is prepared to continue raising interest rates if economic and price developments develop in line with expectations.
While politics are unlikely to derail the case for rate hikes in the longer term, analysts say uncertainty over Ishiba’s stance on monetary policy and the outcome of the Oct. 27 election will affect the BOJ’s decision on how quickly borrowing costs will rise. rise, can complicate.
(Reporting by Leika Kihara; Editing by Sam Holmes)
