Ruling Bloc's Election Victory May Affect BOJ Monetary Policy

Tokyo, Feb. 11 (Jiji Press)--The Japanese ruling bloc's landslide victory in Sunday's general election, which cemented Prime Minister Sanae Takaichi's grip on power, may impact the Bank of Japan's monetary policy steering.

Takaichi, who was inaugurated last October, favors fiscal expansion and monetary easing to achieve strong economic growth, while the Japanese central bank is seeking to continue raising interest rates to normalize its monetary policy.

The BOJ conducted its first rate hike under the Takaichi administration last December. Financial market players are beginning to factor in an additional rate hike this spring

But an economic adviser to Takaichi has argued that the central bank should avoid changing its policy for a year.

With the BOJ's current policy rate target standing at 0.75 pct, the next hike will likely raise the target to 1 pct, believed to be the lower end of the so-called neutral interest rate, which neither stimulates nor cools the economy.

[Copyright The Jiji Press, Ltd.]