Kishida Accepts BOJ Rate Hike, Reaffirms Coordination with Central Bank
On June 22, Japanese Prime Minister Sanae Takaichi reiterated the government's regular stance on coordinating with the central bank, suggesting she has accepted the Bank of Japan's recent decision to raise interest rates. Takaichi stated on Monday, 'We expect close cooperation between the Bank of Japan and the government to implement appropriate monetary policy based on developments in the economy, prices, and financial conditions, in order to sustainably achieve the 2% price stability target.' As a supporter of loose monetary policy, Takaichi made these remarks following the BOJ's rate hike last week. Recent data showed that Japan's national consumer price index rose by 1.4% in May, partly due to government subsidies that suppressed energy costs. Takaichi's government has also prepared an additional budget to continue alleviating the impact of the Middle East crisis on household spending in the coming months. Nevertheless, the BOJ expects that high energy prices resulting from the Middle East conflict will continue to exert significant upward pressure on inflation. This has raised economists' expectations for another rate hike by the BOJ within the year, potentially as early as September.
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