Japan is expected to approve an economic spending package worth as much as 26 trillion yen ($174 billion), aimed at protecting households and businesses from rapidly rising living costs.
Japanese ruling party secretary general Toshimitsu Motegi, giving a speech at an event organized by Kyodo News, said he was against hiking interest rates at this point in time in response to rising living costs, calling such a move “difficult” and questioning whether it could do more harm than good.
Motegi did not give a specific figure for the spending package, but did indicate it would be around ten times larger than the 2.6 trillion yen support plan approved in September.
The package is expected to be approved on Friday.
In contrast to many other central banks, the Bank of Japan has maintained a relaxed monetary policy to date, based on the central bank’s belief that inflation would fall short of its 2% target sometime in 2023.
Outside factors such as rising commodity prices are raising questions over whether such a direction is sustainable though, with Japan’s core consumer inflation topping 3 percent in September and marking the sharpest gain since 1991.
The growing interest-rate differentials between Japan and other countries have led to a weaker yen, which has amplified the impact.
Motegi still believes though that an early rate hike would do more harm than good for the economy.
“It should be a process over about one year, and it would be difficult to suddenly raise interest rates,” he said at the Kyodo event.