Japan's Minister of Economy, Trade and Industry, Ryoshu Akazawa, stated on Sunday that the Bank of Japan's monetary policy could serve as an option to restrain price increases by strengthening the yen. The central bank is currently considering an interest rate hike this month in response to inflationary pressures triggered by the Iran conflict.
Akazawa made these remarks during a television talk show in response to a suggestion from an economist, who argued that a stronger yen would help offset the impact of rising crude oil import costs.
Hideo Kumano, Chief Economist at Dai-ichi Life Research Institute, said on the program that if the Bank of Japan's policies led to a yen appreciation of approximately 10% to 15%, it would suppress price increases across the economy, including food prices, which account for a significant portion of household spending.
Akazawa noted, "While paying attention to the impact on the economy, I believe it is possible to consider the direction mentioned by Mr. Kumano as an option." He added that the Bank of Japan's 2% inflation target is "quite close" to being achieved, while real interest rates remain at a "fairly low" level.
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