Japan’s economic revitalisation minister Minoru Kiuchi urged the central bank on Friday to keep steady communication with the government as it finalises its next policy steps, while refraining from opposing a possible interest rate increase later this month.
His remarks arrive at a sensitive moment for the Bank of Japan, which is widely expected to consider lifting its benchmark rate to zero point seven five percent from zero point five percent at its December eighteen to nineteen meeting. According to Reuters, government officials anticipate the decision and are not preparing to resist it, even though Kiuchi himself has long been counted among supporters of looser monetary settings.
Speaking at a regular news briefing, Kiuchi noted that while discussion around a December hike is intensifying, “specific policy means are for the Bank of Japan to decide.” He added that he wants the bank to steer policy in a way that supports the stable achievement of its two percent inflation target, while maintaining close communication with the government as required under the bank’s own guidelines.
His comments reinforce the impression that Prime Minister Fumio Kishida’s administration is prepared to give the bank room to act. Kiuchi oversees the Cabinet Office, which together with the Ministry of Finance sends representatives to BOJ policy meetings. These representatives do not vote but can request a delay in the final rate decision if they believe more discussion is necessary. Kiuchi did not indicate any intention to use that authority.
BOJ Governor Kazuo Ueda said on Monday that the bank would assess the “pros and cons” of a rate hike at the December meeting. The bank ended its negative rate framework in March, its first increase in seventeen years, marking a cautious shift toward a more normal policy stance.
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Inflation has remained above two percent for well over a year, but the bank has repeatedly warned that sustained wage growth is necessary before it can commit to a firmer tightening cycle. Economists told Reuters that an increase this month would signal confidence that this trend is taking hold, even as household consumption remains patchy and wage negotiations for next spring are still months away.
Japan’s government has been seeking ways to cushion consumers facing higher prices, including subsidies and tax measures designed to support purchasing power. A clearer path for interest rates would help businesses and households plan ahead, though analysts say any tightening from the BOJ is likely to proceed slowly to avoid derailing the country’s fragile recovery.
Market participants expect final clues in the coming days as central bank officials enter their quiet period before the meeting. A move in December would mark the second rate increase this year and another step in Japan’s long, careful shift away from the era of extraordinarily low borrowing costs.
