Key Takeaways:
Prime ministerial candidate Sanae Takaichi said monetary policy details should be left to the Bank of Japan (BOJ), signaling a shift from her previously dovish tone.
Last year, Takaichi criticized rate hikes as “stupid,” raising concerns she might hinder BOJ policy normalization.
Markets are watching closely, with expectations the BOJ could raise rates as early as October.
Analysts warn that a dovish stance could weaken the yen further and fuel inflation pressures.
Japanese prime ministerial candidate Sanae Takaichi adjusted her position on monetary policy during a recent debate, emphasizing that the Bank of Japan should determine the specifics of interest rate decisions.
The remarks mark a distancing from her dovish statements last year, when she called rate hikes “stupid,” a comment that raised doubts about whether she would support BOJ efforts to normalize policy.
Her campaign comes at a critical time: inflation discontent was a major factor in the Liberal Democratic Party’s defeat under Ishiba Shigeru, and traders are now focused on whether the BOJ will deliver a rate hike in October.
Analysts note that if Takaichi maintains a soft stance on rates, it could further weaken the yen and risk stoking inflation. By shifting the emphasis to BOJ independence, she appears to be balancing concerns about growth with the need to restore credibility in Japan’s monetary framework.