Finance Link News, October 12th (Editor Zhou Ziyi) Japan's new Prime Minister Shigeru Ishiba stated on Saturday, October 12 that he will not intervene in monetary policy affairs, as this is the responsibility of the Bank of Japan, aiming to achieve price stability.

At a press conference attended by major party leaders, Shigeru Ishiba stated, "It is important to avoid verbal intervention in monetary policy affairs, as well as avoid giving the appearance of intervention."

He added, "Regardless of what the government says, the Bank of Japan will make its own decisions on policy. I believe that the Governor and officials of the Bank of Japan have a strong sense of responsibility for achieving price stability."

Shigeru Ishiba also pointed out that strong consumer spending is key to continuously breaking free from deflation, and he called for measures to boost real wages.

This former Secretary-General of the Liberal Democratic Party officially became the Prime Minister of Japan on October 1 after winning the LDP leadership election. It is worth mentioning that on his first day in office, Shigeru Ishiba stated that the Japanese economy is not yet prepared for further interest rate hikes. The current environment is not suitable for further rate hikes, shocking the market.

He was previously a staunch hawkish figure, supporting the Bank of Japan's exit from decades of extreme monetary stimulus policies. He also stated to the media in August this year that gradually raising the ultra-low interest rates would help improve Japan's profitability. However, this statement after becoming Prime Minister reflects a clear shift in his stance, seemingly wanting to shed his hawkish reputation in monetary policy.

These unexpectedly candid remarks have pushed down the yen to the US dollar exchange rate and raised new doubts about the intensity of the Bank of Japan's interest rate hikes.

In history, Japanese leaders rarely make direct comments on the Bank of Japan's interest rate policies in public, as it violates the independence of the Bank of Japan in formulating monetary policies, which is required by law.

The Bank of Japan ended negative interest rates in March this year and raised the short-term benchmark interest rate to 0.25% in July because they believe Japan is making progress towards achieving its 2% inflation target in a sustained manner.

Bank of Japan Governor Haruhiko Kuroda has hinted that if the economic and price trends align with the Bank's expectations, the Bank is prepared to continue raising interest rates.

Although political factors are unlikely to affect long-term rate hikes, analysts suggest that the stance of Shigeru Ishiba on monetary policy, as well as the uncertainty of the results of the House of Representatives election on October 27, may complicate the Bank of Japan's monetary policy decisions.

Editor/ping