Japan does not need excessively loose monetary policy, economy minister says

TOKYO: Japan is no longer experiencing deflation, according to Economy Minister Minoru Kiuchi, who spoke on Friday. The government does not seek to pursue an excessively loose monetary policy to achieve a higher inflation rate, Kiuchi emphasized. Monetary policy decisions fall under the purview of the Bank of Japan, he added, without commenting on whether the government opposes further central bank rate hikes.

Japan has moved beyond the era of policies aimed at reigniting economic activity, similar to those under Abenomics, Kiuchi stated during a regular news conference. Prime Minister Sanae Takaichi's policies differ from the extensive stimulus measures introduced by former Prime Minister Shinzo Abe in 2013, Kiuchi added. He clarified that Japan is no longer in a deflationary period, and thus does not require excessively loose policy to pursue inflation.

Kiuchi's remarks came in response to inquiries from reporters about a summary of opinions from the Bank of Japan's September policy meeting, which included a government representative advocating for caution regarding additional interest rate hikes. These comments join other government statements dismissing the notion that Japan is pursuing reflationist policies to stimulate demand through expansionary fiscal and monetary actions.

Finance Minister Satsuki Katayama clarified to US Treasury Secretary Scott Bessent last week that Prime Minister Takaichi is not a reflationist. Kiuchi is often perceived as reflationist due to his past hesitance in raising interest rates and his association with lawmakers advocating for increased spending.