- Personally feels that June rate hike was the appropriate decision
- Delaying rate hikes would cause excessive decline in the yen currency and hurt households more
- Expects BOJ to raise interest rates again at the end of the year
- Then again around the summer of next year before pausing
- BOJ should continue to raise interest rates at a moderate pace
- The appropriate pace can be said to be once every six months, so that it won’t hurt domestic investment
- BOJ rate hikes are important to rectify any excessive weakness in the yen currency
The comments are certainly interesting given that Takaichi’s economic squad is typically made up of reflationists. So, Nagahama’s comments definitely offer some intrigue as they are not entirely biased so to speak. I guess that is quite refreshing to see.
That being said, he does balance things out by saying that the BOJ should move at a much slower pace. And this time around, is focusing the conversation on relative weakness in the Japanese yen currency.
The government economic panel doesn’t really hold any influence on the BOJ but they are mainly there just to back prime minister Takaichi and her policy setting, so as to not draw too much scrutiny from the public and other lawmakers. That especially after unveiling her fiscal plans since taking over last October, which has not gone down well as evident by the trend in the yen currency.
As a reminder, this was the backdrop when she took over at the end of last year:
This article was written by Justin Low at investinglive.com.