Hiroko Ota Speaks Up on BOJ’s Policy Stance

May 18, 2007
By Ken Worsley

Speaking to reporters at a press conference after a Cabinet meeting this afternoon, Minister of State for Economic and Fiscal Policy Hiroko Ota spoke up on the stance expressed recently by Bank of Japan Governor Toshihiko Fukui, who has continually held that the BOJ may raise interest rates despite the lack of an increase in consumer prices.

Ota began by stressing that the government and the Bank of Japan need to work together to ensure economic growth, and stated, 「物価がマイナスでも（日銀は利上げを）何が何でも先行する、との見方は大間違い� 。」 or, “The viewpoint of remaining focused on raising interest rates at any cost, even amidst falling consumer prices, is a huge mistake.”

She might be right, but she’s holding back three things: 1) She’s not allowed to talk about a rise in the consumption tax until after the Upper House elections in July, 2) The Bank of Japan won’t raise rates until after the Upper House elections in July, and 3) Governor Fukui is doing his best to prevent the market from getting complacent by at least suggesting that rates might be raised, which he has to do from time to time in order to give the appearance that he’s, you know…doing something.

Filed Under Bank of Japan, Cabinet Office, Consumer Price Index