(Bloomberg) — One of the leading candidates to become Japan’s next prime minister said it was too soon for the Bank of Japan to move away from an ultra-easy policy, as the nine lawmakers set to contest this month’s ruling party election sparred during a press conference on Saturday.
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Sanae Takaichi, a well-known dove on fiscal and monetary policy, said that since inflation was being driven by high costs of energy, food and other commodities, the BOJ should be more cautious about raising interest rates.
“I believe that monetary easing should continue,” she said. “Interest rates should remain low because it should not become difficult for young people to buy homes or for companies to make investments that will increase productivity in society.”
All of the candidates for the Sept. 27 election to become leader of the ruling Liberal Democratic Party have put forward ideas to boost economic growth in their campaign pledges, but most have been wary of appearing to put pressure on the BOJ.
The winner of the race will also need to confront issues including China’s diplomatic and military tensions with Japan and its allies, paying for the needs of an aging and shrinking population, and dealing with the nation’s massive government debt.
The BOJ policy board will hold a two-day meeting ending Sept. 20 at which it’s widely expected to hold policy steady after two rate rises this year. Economists generally expect more hikes later this year or early in 2025. The central bank has said that financial conditions remain accommodative after the two rate moves.
Takaichi, an advocate of the aggressive economic stimulus policies of former Prime Minister Shinzo Abe, has been more willing to call for the BOJ to suspend its policy normalization, and support for her appears to be relatively strong.
A survey published on Friday by NNN News of LDP members and party supporters showed that Takaichi had 22% support, behind only 25% for former defense minister Shigeru Ishiba. Ishiba and ex-environment minister Shinjiro Koizumi are ahead in most public opinion polls but the coming election is a vote among LDP lawmakers and rank-and-file party members.
If she wins Takaichi will be set to become Japan’s first female prime minister, while Yoko Kamikawa is another woman competing in the race. That comes at a time when Democrat Kamala Harris is vying to become the first female US president.
During the press conference, the candidates questioned each other’s policy pledges, adding some tension to the event. Toshimitsu Motegi, the LDP’s current No. 2, called a proposal raised by Ishiba to create an Asian NATO “unrealistic” given the complex relationships between countries in the region.
Some of the candidates were asked about an expected move by US President Joe Biden to block a move by Nippon Steel Corp. to buy United States Steel Corp. Koizumi said it was important that the US and Japan work together to tackle the problem of dumping of Chinese steel, adding that the alliance between the two countries shouldn’t be affected by the fate of the proposed acquisition by Nippon Steel.
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