To rate hike or not to rate hike?

January 6, 2007
By Ken Worsley

With the next Bank of Japan governor’s meeting scheduled for January 17-18, speculation is rife over whether or not the BOJ will decide to raise interest rates once more. Toshihiko Fukui, the BOJ’s current governor, is clearly itching to raise them; perhaps he wants his legacy to be established as the guy who put Japan on the course toward normalized monetary policy.

But there are plenty of issues standing in his way, with some of them being political. The Abe administration has not come out and said what it thinks should be done, which is a good thing. However, they must be communicating their message through some back channels.

Keidanren is certainly talking up the economy, as related in a Japan Times piece this morning. However, Fujio Mitarai, the chairman of Keidanren, has joined Abe in not making any specific public comments on the rate hike issue. Nobuo Yamaguchi, chairman of the Japan Chamber of Commerce and Industry, however, had this to say: