A government panel member in Japan, Toshihiro Nagahama, is advocating for the Bank of Japan to continue raising interest rates at a moderate pace. This move aims to rectify the excessive decline of the yen.
Interest Rate Hikes
Nagahama, known for being an economic aide to Prime Minister Sanae Takaichi, suggests that the Bank of Japan should raise its policy rate, currently at 1%, two more times at a pace of once every six months. He believes Japan’s nominal neutral rate, the level that neither cools nor overheats growth, is around 1.5%.
Nagahama’s comments come as the administration and Takaichi’s reflationist aides express concern about the economic pain inflicted by the yen’s decline. The Bank of Japan is expected to raise interest rates by year-end and again around summer next year, before pausing for a while.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
