Delay in Raising Rates Could Cause Turmoil: BOJ Governor

Nagoya, Dec. 1 (Jiji Press)–Bank of Japan Governor Kazuo Ueda said Monday that the central bank delaying an interest rate hike could cause turmoil. “Being slow to adjust the degree of monetary easing could take inflation to levels as high as in the United States and Europe,” Ueda said at a press conference in the central city of Nagoya. Ueda added that high inflation could force the BOJ to raise interest rates significantly, which “would cause turmoil.” The BOJ is scheduled to hold a policy-setting meeting on Dec. 18-19. During his speech earlier on Monday, the BOJ chief indicated that the central bank will make a decision after assessing moves ahead of next year’s “shunto” labor-management wage negotiations. At the press conference, he emphasized that an interest rate hike would not act as a brake on the economy but would be a “process of loosening the accelerator” for a stable economy and prices. One focus is whether the administration of Prime Minister Sanae Takaichi, who advocates for monetary easing, will tolerate a BOJ rate hike. “At meetings with the prime minister and others, we have had frank and positive discussions on various issues,” Ueda said. “I would like to continue to communicate sufficiently with them.” Ueda noted that long-term economic growth can be achieved by appropriately adjusting the degree of monetary easing. “An important point (when deciding whether to raise interest rates) will be whether the mechanism for wages and prices to rise moderately will be maintained,” he also said. He revealed that ahead of the upcoming policy-setting meeting, the BOJ is focusing on gathering information on wage hikes from both management and labor through hearings. As for uncertainties over the U.S. economy stemming from higher tariffs, the BOJ chief said that risks have decreased “more than expected,” but added, “We will surely be vigilant for any significant negative news.” END [Copyright The Jiji Press, Ltd.]