Following Japanese Prime Minister Takaichi Sanae's expression of support for maintaining accommodative monetary policy, Hajime Takata, the most hawkish member of the Bank of Japan's policy board, has reiterated his call for raising the benchmark interest rate. Speaking to business leaders in Kyoto on Thursday, Takata stated that the central bank should proceed with further policy adjustments and communicate based on the premise that the price stability target has largely been achieved. At last month's policy meeting, Takata unexpectedly proposed consecutive interest rate hikes, drawing significant market attention. This marks his first public remarks since that proposal. While his renewed call for tightening was anticipated, it underscores the emerging divergence between the faction within the central bank advocating aggressive policy normalization and the stance of the Japanese government. This comes after Prime Minister Takaichi nominated two prominent dovish academics—Toichiro Asada, a professor at Chuo University, and Ayano Sato, a professor at Aoyama Gakuin University—to replace outgoing board members Asahi Noguchi and Junko Nakagawa. Noguchi's term concludes at the end of next month, while Nakagawa's ends in June. These developments precede the Bank of Japan's scheduled policy meeting on March 18-19, where it is widely expected to maintain current settings.
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