TOKYO — The Bank of Japan should “maintain the current course” of monetary easing, Prime Minister Fumio Kishida said during a debate on Tuesday, signaling that he would maintain a policy that rivals criticize as contributing to the dramatic fall of the yen.
Nine party leaders, including Kishida, who leads the ruling Liberal Democratic Party, took part in the discussion ahead of next month’s upper house elections. The debate focused on inflation and the economy, which accounted for half of the questions asked.
Although the increase in interest rates would support the yen, it would also have “a major impact on the economy, such as small and medium-sized businesses [borrowing] costs and mortgages,” Kishida said.
“Monetary policy should be decided by looking at the big picture,” he said, adding that “now is not the time to change it.”
The Prime Minister acknowledged that the yen’s fall to its lowest level in 24 years against the dollar “is something we should be concerned about”, noting that the Ministry of Finance, the Financial Services Agency and the Bank of Japan all share this concern.
Rather than changing monetary policy, Kishida proposed targeted measures, including fiscal spending, to lower energy and food prices.
“It is important to focus policy on energy and food,” he said, noting that over 60% of current inflation in Japan comes from the former and over 20% from the latter. The Prime Minister had announced plans for a reward points system to encourage energy conservation just before the debate.
Some opposition members have called for temporarily suspending or reducing the consumption tax, a move Kishida said he is not considering.
“It has positioned itself as a stable source of Social Security funding,” he said, adding that the costs of such programs have risen 20% over the past decade.
Kishida expressed support for restarting idle nuclear power plants while emphasizing “safety” as Japan sees nuclear power as a potentially important way to curb soaring energy costs. He was also asked about building new facilities or expanding existing ones, but did not give a specific answer.