Tokyo, April 12 - Japan’s top trade negotiator and head of the Ministry of Economy, Trade and Industry said on Sunday that Bank of Japan monetary policy that strengthened the yen could be considered as one option for curbing rising prices.
Ryosei Akazawa’s remarks came in response to an economist’s comments during a television talk show suggesting a stronger yen could blunt the impact of elevated crude-oil import costs on domestic inflation.
On the public broadcaster NHK, Hideo Kumano, chief economist at Dai-ichi Life Research Institute, argued that if BOJ policy were used to strengthen the yen by around 10% to 15%, it could suppress price rises across the economy, including on food, which accounts for a large share of household spending.
"If BOJ policy were used to strengthen the yen by around 10% to 15%, it could suppress price rises across the economy, including on food, which accounts for a large share of household spending," Hideo Kumano said on NHK.
Answering that suggestion, Akazawa said: "While watching the impact on the economy, I think that considering things in the direction of what Mr. Kumano just mentioned could be possible as one option." He added that the BOJ’s 2% inflation target was "quite close" to being achieved while real interest rates remained "quite low".
Financial markets are currently pricing in roughly a 60% chance that the BOJ will raise interest rates on April 28. The probability reflects market participants reassessing the policy path as Tokyo grapples with imported inflation pressures tied to the Middle East conflict.
BOJ Deputy Governor Ryozo Himino cautioned on Friday that monetary policy guidance will take into account the scale and length of the economic shock caused by the Middle East war, underlining the need for vigilance over the risk of stagflation.
Taken together, the exchange of views on television and Akazawa’s response indicate that yen strength achieved via monetary policy is on the table as one potential, though not definitive, tool to address import-driven price pressures. Officials and markets alike are balancing considerations of inflation dynamics, the proximity to the central bank’s 2% target, and the broader economic fallout from geopolitical shocks.