A senior official from Japan's ruling party urges the Bank of Japan to clarify its determination to raise interest rates

The Zhitong Finance App learned that Nikkei (Nikkei) quoted the ruling Liberal Democratic Party Director Toshimitsu Motegi (Toshimitsu Motegi) on Monday as saying that the Bank of Japan should more clearly indicate its determination to normalize its monetary policy, including a steady increase in interest rates. Motegi Toshitsu said, “Excessive depreciation of the yen is clearly bad for the Japanese economy.”

Motegi Toshimitsu said that in order to stop the yen's downward trend, the Bank of Japan should clearly communicate its intention to abandon large-scale stimulus plans. According to reports, he also said that Japanese companies may be affected by the tightening of monetary policy.

The Bank of Japan's two-day policy meeting will end on July 31. At that time, the board of directors may discuss whether to raise interest rates that are currently close to zero. Last week, Japanese Prime Minister Fumio Kishida (Fumio Kishida) said that the Bank of Japan's policy normalization would support Japan's transformation to a growth-driven economy.

Many economists expect the Bank of Japan to raise interest rates to 0.25% this year, but there is still disagreement about whether to raise interest rates later this month.

At the July meeting, the Bank of Japan plans to announce a detailed plan to reduce the scale of its huge debt purchases and reduce its balance sheet by $5 trillion. Analysts said that if the July rate hike is accompanied by large-scale reduction plans, it could trigger a huge market reaction.

The weakening yen has boosted the import costs of raw materials and fuel, harmed consumer activity, and has always caused Japanese policymakers a lot of headache. Some analysts said that the Japanese government is suspected of interfering in the foreign exchange market this month to boost the yen, which may have put pressure on the Bank of Japan to do its part to slow the decline in yen, such as releasing more hawkish signals.

In March of this year, the Bank of Japan ended negative interest rates and yield curve control (YCC), marking Japan's bid farewell to a 10-year aggressive stimulus plan. However, since the market is concerned that there is still a large spread between the US and Japan, this decision failed to reverse the decline in yen.