Japan’s trade minister indicated Sunday that central bank actions to strengthen the country’s currency could serve as a tool to combat rising inflation linked to Middle East conflicts affecting oil prices.
Ryosei Akazawa, who leads Japan’s Ministry of Economy, Trade and Industry and serves as the nation’s chief trade negotiator, made the comments during a television discussion about economic policy options.
The remarks came after economist Hideo Kumano from Dai-ichi Life Research Institute suggested on the NHK public television program that strengthening the yen by 10% to 15% through Bank of Japan policies could help reduce price increases throughout the economy, particularly for food items that represent a significant portion of household budgets.
“While watching the impact on the economy, I think that considering things in the direction of what Mr. Kumano just mentioned could be possible as one option,” Akazawa responded. He noted that the central bank’s 2% inflation goal was “quite close” to being met while real interest rates stayed “quite low.”
Market analysts currently estimate about a 60% probability that Japan’s central bank will increase interest rates during its April 28 meeting.
Bank of Japan Deputy Governor Ryozo Himino stated Friday that monetary policy decisions would take into account both the magnitude and duration of economic disruption from the Middle East conflict, emphasizing concerns about potential stagflation risks.
