Japan’s Basic Economic Policy to Clarify BOJ Independence

Tokyo, July 10 (Jiji Press)–The Japanese government plans to clarify the independence of the Bank of Japan in its upcoming annual economic and fiscal policy guidelines, economic and fiscal policy minister Minoru Kiuchi suggested Friday. The government has already reviewed the description of monetary policy in a draft of its new Basic Policy on Economic and Fiscal Management and Reform in response to a growing view that the wording was discouraging the BOJ from raising interest rates. As the government has been failing to dispel concerns over the central bank’s independence, it will modify the wording in the draft again. “We are working on adjusting the wording in the draft based on opinions from the ruling bloc,” Kiuchi told a press conference. In its draft basic policy, released in late June, the government said that appropriate monetary policy management is extremely important for realizing a strong economy. Concerns spread later among market participants that a delay in an interest rate hike by the BOJ would lead prices to soar, causing long-term interest rates to rise. The government presented a modified draft to the ruling camp led by the Liberal Democratic Party on Tuesday that included the phrase, “appropriate monetary policy management aimed at achieving stable price growth,” but concerns still persist. “As stated in Article 3 of the BOJ law, the bank’s autonomy regarding currency and monetary control must be respected,” Kiuchi said. Noting that the basic policy is based on this principle, he said, “The government does not predetermine the timing or scale of interest rate hikes by the BOJ.” Still, he did not elaborate on specific details of further revisions, saying: “This is being coordinated.” END [Copyright The Jiji Press, Ltd.]