Japan PM Kishida signals preference for BOJ to keep easy policy

TOKYO :Japanese Prime Minister Fumio Kishida on Tuesday made clear his view the central bank should maintain its current ultra-loose monetary policy.

He said sharp yen falls are "worrying," but that monetary policy and exchange rates must be dealt with separately.

"Monetary policy affects not just currency rates, but the economy and smaller firms' businesses," Kishida said in a debate with leaders of other political parties. "Such factors must be taken into account comprehensively."

Kishida then asked Yuichiro Tamaki, who leads a small opposition the Democratic Party for the People (DPP), about his party's view on monetary policy.

Tamaki said the BOJ must keep current ultra-low interest rates, arguing that tightening monetary policy was "unthinkable" as doing so would push up mortgage rates and corporate borrowing costs.

"I agree with you on the point that Japan shouldn't alter monetary policy," Kishida said after listening to Tamaki's comment.

Markets are rife with speculation the BOJ could tweak its yield curve control (YCC) policy and allow bond yields to rise more to prevent the yen from falling further and inflating the cost of fuel and food imports.

With interest rates seen staying ultra-low, policymakers have had few means to combat yen declines other than through verbal warnings.

Finance Minister Shunichi Suzuki said on Tuesday he was concerned about recent sharp yen weakening and would respond to exchange market moves if necessary, repeating a warning as the yen hovered near a 24-year low versus the dollar.

"The government will closely liaise with the Bank of Japan while watching the exchange market and its impact on the economy and prices with even greater sense of urgency," Suzuki said.

Kishida was speaking in a debate with other leaders from political parties ahead of the July 10 upper house elections.