TOKYO (Kyodo) — Prime Minister Sanae Takaichi and Bank of Japan chief Kazuo Ueda on Tuesday discussed foreign exchange issues in their first one-on-one talks since she took office last month, as the yen’s continued fall against the dollar and euro raises concerns about its economic impact.
After the meeting at the prime minister’s office, Ueda told reporters that he had “frank, positive talks” with Takaichi from various perspectives, including the economy, prices and monetary policy.
When asked about the details of the discussion, however, Ueda declined to elaborate, saying only that currency moves should be “stable, reflecting economic fundamentals.”
The talks took place a day after the yen hit a record low against the euro in the 180 range, partly due to waning expectations of a near-term interest rate increase by the BOJ under Takaichi, an advocate of fiscal spending and easy monetary policy. The yen also remains on the defensive relative to the dollar around 155, a nine-month low.
Ueda said he received no requests from Takaichi regarding the BOJ’s monetary policy. On the prospect of another interest rate hike, the governor said, “We will make an appropriate judgment, depending on upcoming data and information.”
The central bank left its benchmark rate unchanged at around 0.5 percent in October for the sixth straight policy meeting, but it remains committed to pursuing a path of rate hikes if the economy and prices move in line with its expectations.
Takaichi has previously expressed concern that monetary tightening too quickly could slow economic growth. Her government is scheduled to compile a package in the coming days to ease the pain of rising prices on households.
Ueda said he told Takaichi that a pattern of prices and wages rising in tandem has reemerged, helped by government and BOJ efforts.
He said the prime minister also understood his explanation that the BOJ has been gradually adjusting the degree of monetary easing to ensure its 2 percent inflation target will be achieved in a sustainable and stable manner.
